Credit Contracts and Financial Services Law Reform Bill

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Credit Contracts and Financial Services Law Reform Bill

Government Bill

104—2

As reported from the Commerce Committee

Commentary

Recommendation

The Commerce Committee has examined the Credit Contracts and Financial Services Law Reform Bill and recommends that it be passed with the amendments shown.

Introduction

The bill is an omnibus one that seeks to amend the Credit Contracts and Consumer Finance Act 2003 (CCCFA), the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA), the Private Security Personnel and Private Investigators Act 2010 (PSPPIA), and the Personal Property Securities Act 1999. The bill also proposes to repeal the Credit (Repossession) Act 1997, and incorporate its provisions into an expanded Credit Contracts and Consumer Finance Act. The principal amendments proposed in this bill would

  • establish the protection of consumers as the primary purpose of the CCCFA

  • require lenders to adhere to responsible lending provisions

  • establish a Responsible Lending Code to provide guidance and elaborate on lenders’ responsibilities

  • increase the disclosure requirements for consumer credit contracts

  • make clearer the tests for unreasonable credit fees and default fees

  • require all repossession agents to be licensed under the PSPPIA

  • clarify the guidelines for the Courts to reopen “oppressive” credit contracts under the CCCFA

  • introduce an infringement regime for minor offences, and significantly increase the penalties for major offences.

Our commentary covers the key amendments we recommend to the bill. It does not discuss minor or technical amendments proposed to improve workability, clarity, and legal efficacy.

Commencement

We recommend amending clause 2 to stagger the commencement of the bill’s provisions. The commencement dates for clauses that do not come into force on the day after the legislation receives the Royal Assent will be appointed by Order in Council by the Governor-General; all provisions will be required to come into force within 12 months of the date of Royal Assent. We believe staggered commencement is needed to allow time for the development of the Responsible Lending Code, and for the necessary changes to be implemented in the credit industry.

Interpretation

We recommend amending the definition of “standard terms” in clause 6 to refer to “standard form contract terms that are intended to be contained in a class of agreements”. We consider that this amendment reflects more closely the intent of the bill regarding the standing disclosure requirements.

We recommend amending the definition of credit fees to include fees payable to third parties associated with the creditor, making them subject to the unreasonable fees provisions.

Meaning of consumer credit contract

Clause 11 of the bill proposes amendment to section 11 of the CCCFA to define a consumer credit contract as one involving credit that is to be used, or intended to be used, “wholly or predominantly” for personal, domestic, or household purposes. We recommend amending this section to make it clear that it is the debtor’s intention for the use of the credit which determines whether they have entered into a consumer credit contract.

Fair Trading Act

We recommend an amendment to add new section 34B(5) to the Fair Trading Act 1986 (Schedule 3). Currently, the Act does not define “layby sales” as a consumer credit contract; this amendment would allow layby sales to be classified as a consumer credit contract if interest charges or credit fees are payable.

Lender responsibilities

A number of provisions in this bill would require lenders to act with care, diligence, and skill when advertising consumer credit, when entering into a consumer credit contract, and in subsequent dealings with the borrower; these are the “lender responsibility principles”. Our recommendations relating to the principles are set out below.

Scope and significance

We recommend inserting new section 9AA (clause 9) to the CCCFA, an outline provision explaining the relevance of the lender responsibility principles, and when they apply. The bill introduces the concept of responsible lending to New Zealand credit legislation for the first time, and we believe this amendment would be helpful for lenders and consumers. We recommend removing “lessor” from the definition of lender, as the bill does not seek to apply the lender responsibilities to consumer leases.

We recommend amending new section 9B(2)(a) to make it clear that the lender responsibility principles would apply to agreements as they are defined in new section 9A. We have five principal recommendations relating to new section 9B(3). We suggest inserting the word “including” before “by ensuring” in several of the paragraphs to prevent the misapprehension that responsible lending is limited to the assistance referred to in those paragraphs.

We recommend amending new section 9B(3)(b) to require lenders to help borrowers to be “reasonably aware” of the full implications of entering into a credit contract. We consider that the addition of the word “reasonably” provides more legal certainty for enforcement purposes, and strikes an important balance between the reasonable obligations of lenders and the protection of consumers. We also recommend requiring lenders to express in “plain language” the terms of agreements and any subsequent variations to agreements, to help borrowers and guarantors to reach informed decisions.

We recommend amending new section 9B(3)(e) to expand on “problems”, defining them as situations where a credit contract has been breached, or may be breached. We also recommend requiring lenders to treat borrowers “in an ethical manner” instead of “with respect”. We believe this wording is stronger, more certain, and consistent with other legislation.

Guarantees

We recommend the addition of new section 9B(3A) to provide detail on how the lender responsibility principles would apply to guarantees and the treatment of guarantors, and supplementing this amendment by inserting a definition of “relevant guarantee” in new section 9A. We consider it necessary to make it clear that the principles would cover guarantors. Guarantors incur risk when giving guarantees of obligations under credit contracts and therefore require similar protections regarding entering into transactions, disclosure, and oppression.

Credit-related insurance

We recommend removing “insurer” from the definition of “lender” in section 9A (clause 9). We consider that insurers perform a function distinct from those of lenders and should not be subject to the lender responsibility principles. However, we are aware that credit-related insurance products often contribute to problem debt, and consider they should be addressed in the legislation.

We recommend inserting a definition of “relevant insurance contract” in section 9A. If the lender arranges credit-related insurance, we consider they should be subject to relevant lender responsibility principles, and recommend adding new section 9B(3B) accordingly.

Proceedings for breach of legal obligations under other Acts

We recommend the insertion of new section 9BA to prevent potential double jeopardy, or duplicate concurrent proceedings, if proceedings are taken against a creditor under another Act.

Responsible Lending Code

The bill introduces the Responsible Lending Code (clause 9), an instrument setting out detailed guidance for lenders on complying with the (legally binding) responsible lending principles. We have a number of recommendations about the Code, as discussed below.

Status and content

We recommend amending new section 9C to clarify the Code’s status as non-binding. We recommend amendments to section 9D to ensure the content of the Code accurately reflects the intent of the responsible lending principles set out in section 9B. We particularly draw attention to section 9D(1)(b)(iii), which refers to lenders giving assistance to borrowers and guarantors for whom English is a second language. We believe this amendment would mitigate the risk of borrowers entering contracts for credit they do not understand and may be unable to afford.

Preparation of the Code

We recommend the addition of transitional provisions (new clause 1A of Schedule 1AA) in Schedule 1 of the bill to allow the Minister to prepare the Responsible Lending Code before the principles come into force. We consider this amendment necessary, as the Code sets out detailed guidance to lenders on how to comply with the responsibility provisions; therefore it would be beneficial for the Code to be prepared in advance so as to be ready to come into force at the same time as the lender responsibility principles.

Disallowable instruments

The Regulations Review Committee reported to us on the regulation-making powers contained in clause 9 (see proposed section 9F). We have recommended amendments to this section which would make the Responsible Lending Code a disallowable instrument under the Legislation Act 2012, thus requiring that it be presented to the House of Representatives. As per the amendments we recommend to this bill, the Code would have to be prepared by the Minister, and its legal status would be non-binding. However, compliance with the Code would be evidence of compliance with the responsible lending principles; therefore it is significant enough to justify being subject to parliamentary oversight.

Disclosure

The disclosure provisions in the bill are crucial to increasing consumer protection. However, we believe a number of amendments are needed to make the disclosure requirements wholly effective, and our recommendations are set out below.

Initial disclosure

We recommend amending clause 13 to make it clear that all initial disclosure, including disclosure of the terms of the contract, must occur before a credit contract is entered into. We recommend an amendment to clause 68 to also require the disclosure at this point of a creditor’s trading name and registration number under the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

Publication of standard form contract terms and costs of borrowing

This bill adds “standing disclosure” to the existing disclosure requirements in the CCCFA. Standing disclosure is intended to inform the wider market about a lender’s standard form contract terms and the costs of borrowing.

We recommend amending sections 9H and 9I (clause 9) to require lenders to provide a copy of standard form contract terms and information about costs of borrowing, free of charge and on request. Lenders could also supply this information electronically with consent from the consumer.

We also recommend that lenders be required to display this information prominently on any website they have, and, if operating from business premises, display a notice which clearly states that this information is available on request. This amendment would prevent any misapprehension that all the terms of all credit contracts would have to be displayed on a lender’s premises.

Extended meaning of business premises

We recommend inserting new section 9IA (clause 9) to extend the meaning of business premises. We understand that some lenders operate from a non-fixed location such as a stand, stall or vehicle (such as a truck shop), and we wish to ensure the new standing disclosure provisions apply to them equally.

Content of continuing disclosure statement

We recommend inserting new clause 13A, to provide for regulations to prescribe a minimum repayment warning on credit card statements. The warning would detail to the debtor the consequences of paying only the minimum monthly payment on credit card debt, such as higher interest costs over time. The CCCFA already provides for continuing disclosure of revolving credit products, and we consider this amendment is crucial to facilitating financial literacy among borrowers.

Mandatory disclosure forms

We recommend amending clause 22 to add new section 32(1A), to make it clear that using prescribed mandatory forms for disclosure would meet the disclosure standards under the CCCFA. We also recommend inserting new clause 22A to make the use of model disclosure statements clear and to distinguish them from prescribed mandatory disclosure forms. Both mandatory forms and model disclosure statements are to be set out in regulations.

Disclosure of transfer of a creditor’s rights under a consumer credit contract

We recommend that clause 19 be amended to provide for regulations to be made to exclude securitisation and covered bond arrangements from the new transfer disclosure requirements. This is because in these cases the initial lender usually remains the first point of contact for the debtor, even though the creditor’s rights under the credit contract are held by another party.

Pawnbroking contracts

We recommend the insertion of new clause 12A to exempt pawnbroking contracts from Part 2 of the CCCFA, because disclosure is already provided for in the Secondhand Dealers and Pawnbroking Act 2004. Pawnbrokers would remain subject to the responsible lending provisions.

Effect of cancellation

We recommend an amendment to clause 21 regarding the cancellation of a contract during the “cooling-off” period. We wish to set out clearly the calculation that creditors undertake to determine the amount owed by each party; debtors and guarantors should not be liable for any interest, fees, or other charges specified in the contract except as provided for in new section 30.

Fees and charges

We are aware that unreasonable fees and excessively high interest rates and charges can contribute to high and sometimes spiralling household debt levels. The bill as introduced includes a number of significant amendments to constrain the charging of unreasonably high fees and default interest; our amendments to these provisions are discussed below.

Default interest charges

Clause 23 as introduced would prevent creditors charging default interest on an amount greater than the amount of the default. At present, if a debtor defaults on a payment, lenders may be able to specify an amount as being payable earlier than would be the case if there had not been a default (under an acceleration clause). We recommend amending clause 23 to disallow default interest charges on an earlier payable amount, and consider that this would reduce the likelihood of debt levels increasing at a rate that might be unmanageable for borrowers.

We recommend exempting on-demand credit facilities, such as an overdraft on a cheque account, from this clause as the nature of such facilities allows creditors to demand full repayment at any time (new clause 23(2)).

Prepayment fees

We recommend amending clause 25 to state explicitly that a fee for repaying a loan before term is unreasonable if the amount charged exceeds a reasonable estimate of the loss of the creditor from the prepayment of the loan. Prepayment fees (as defined in the clause) would apply exclusively to fixed-rate consumer credit, where full or part payment of the loan before the due date results in a loss for the creditor.

We also recommend an amendment to this clause to separate administration costs from the prepayment fee and specify them separately. (Whether such an administration fee is unreasonable is to be determined under new section 44.) We believe these amendments would restrict prepayment fees and provide greater certainty for the Courts in determining whether or not they are reasonable.

Other credit fees and default fees

We recommend an amendment that replaces sections 44 and 44A (of clause 26) to establish reasonable standards of commercial practice as a consideration for the Courts when determining whether credit fees or default fees reasonably compensate creditors for costs or losses. Our proposed amendment would restore some of the wording in the CCCFA; for example, it refers to “reasonably compensating” the creditor, where the bill as introduced referred to a “reasonable estimate of the creditor’s reasonable average costs”. We consider that the amended wording would provide more certainty for creditors. However, we consider that the reasonable standard consideration should be subordinate to the principle that credit fees and default fees should only reasonably compensate the creditor. Our amendment confirms and makes it clear that reasonable standards of commercial practice are not intended as a separate basis for calculating credit or default fees, but only to inform the main test (which concerns costs and losses). We also recommend the addition of new section 44B “Compliance with the Code is evidence that the fees are not unreasonable”, which would allow further guidance on credit and default fees to be incorporated into the Code.

Fees and charges passed on by creditor

We are aware that many lenders sell credit-related insurance products to borrowers, upon which they can charge a reasonable commission. We recommend amending clause 27 to prohibit this charge if the borrower is required by the creditor to buy insurance from a particular insurer, or particular insurers, or the insurance is to be financed by the credit contract with that lender. Without seeking to limit the charging of reasonable commissions by lenders, we consider that they should not be able to gain financially from a transaction in which the borrower cannot exercise choice.

Recovery of payments

We recommend inserting new clause 27A to require lenders to refund, or credit against any outstanding balance, any payments received from a debtor to which the lenders were not entitled. This would prevent a creditor (for example a truck shop operator) from giving debtors a “credit” which must be used to acquire goods or services from the creditor.

Unforeseen hardship

Under the CCCFA borrowers can apply to their creditor to change their loan term, or reduce or postpone payments on the grounds of unforeseen hardship. We recommend amending section 55(1A) (clause 31) to clarify what the debtor must specify in their written application. We recommend amending section 55(1B) to make it clear that a debtor who has made an application cannot make another application in relation to the same credit contract within 4 months of the date of the previous application, unless the reasons are materially different. Our amendment is intended to mitigate the risk of multiple applications being lodged by a debtor for the purposes of stalling enforcement action by the creditor.

Obligation of creditor and treatment of notices

We recommend amending clause 33, which sets out the obligations of lenders in their treatment of unforeseen hardship applications. We are recommending drafting improvements to make it clear that a creditor may not commence or undertake any enforcement action whilst such an application is being considered. We also recommend requiring creditors to notify borrowers of their receipt of the application, any request for additional information required to consider the application, and their decision by written notice; we recommend inserting clause 34A which sets out in detail how these notices may be given to the debtor.

Repossession

The bill as introduced proposes a number of significant provisions relating to repossession, which would have the effect of introducing a regulator and offences for repossession agents, and would require the licensing of repossession agents under the PSPPIA. We have suggested a number of amendments to the repossession provisions which are set out below.

References to credit contracts include security agreements

We recommend the addition of new section 83AB (clause 43) to make it clear that agreements in which security interests are taken in connection with a credit contract were to be treated as part of that credit contract. This amendment would ensure that if a separate security agreement existed the repossession provisions would still apply. We recommend inserting new section 83BA to make it clear that this Part of the Act does not itself create the right to repossess consumer goods.

Prohibitions relating to security interests

We recommend moving clause 8 to clause 43 (inserting section 83ZGA) and clarifying its intent. New section 83ZGA would prohibit security interests being taken over certain essential consumer goods including bedding, medical equipment, identification documents, and cooking equipment. We consider this to be a crucial consumer protection. We note here that items of cultural significance and children’s toys were not included as they can be difficult to define, and we do not wish to impede consumers’ access to credit.

Rules that apply before repossession

We recommend amending new section 83C (clause 43) to require creditors to comply with the responsible lending principles that relate to repossession. We recommend moving section 83B(2) to section 83CA and clarifying its intent. New section 83CA would require all consumer goods given for a security interest to be specifically identified by item (rather than by kind) in the credit contract. This is a significant change from the current legislation, which allows all present and future acquired goods to be repossessed. Our amendment would prohibit repossession of more items than the security interest specifically identifies.

We recommend extending the repossession warning notice expiry date in subsection 83D(4) from 28 to 60 days; we consider that this would allow enough time for creditors and borrowers to attempt a resolution and for repossession agents to locate missing goods. We recommend amending section 83E, which would allow debtors to voluntarily deliver goods to creditors, to apply to all consumer credit contracts, not just credit sales (as might be inferred from the reference to “returning” goods).

We recommend three main amendments to section 83G. They would require complaints to be in writing; clarify the meaning of an enforcement action; and make it clear that if a complaint about enforcement action had been made, and no agreement reached, the complaint would be taken as resolved unless the debtor referred it to a dispute resolution scheme within 14 days of notice being given by the creditor. We also recommend the addition of new section 83GA to prevent subsequent complaints being lodged by a debtor for the purposes of stalling enforcement.

We recommend adding new section 83HI to ensure that obligations on lenders using disabling devices are enforceable.

Rules that apply at time of repossession

We recommend the addition of new section 83JA (clause 43) to set out clearly the obligations regarding repossession if the borrower is not home at the time of the repossession. Our amendment requires that the premises not be left obviously open and that a written notice be left for the borrower. We are aware that securing the property would not be possible if entry had been forced; however the appearance of a closed property would lower the risk of theft. We recommend amending section 83M to prohibit repossession on Sundays and public holidays. Section 83N requires creditors to be registered under the FSPA in order to exercise repossession rights. We recommend amendments to make it clear that any persons carrying out repossession would be required to be licensed (or otherwise certified) under the PSPPIA, regardless of the registration status of the creditor.

Rules that apply after repossession takes place and notices

Section 83T (clause 43) sets out requirements for lenders when selling repossessed goods; we recommend an amendment requiring them to obtain the best price reasonably obtainable at the time of sale (for consistency with wording in the Property Law Act 2007). We recommend clearly defining the amount a debtor would be liable to pay when reinstating a credit contract for repossessed goods under section 83V. New subclause 83V(3) makes it clear that calculation of creditor’s costs would be subject to the rules governing the unreasonable fees provisions. We recommend allowing creditors to serve notices (except the repossession warning notice and post-repossession notice) electronically if a borrower has provided an email address for this purpose.

Enforcement and remedies

It became apparent to us that there is a lack of awareness among consumers that remedies for breaches of the CCCFA can be sought through the Courts, disputes tribunals, and dispute resolution schemes; we recommend amendments to clauses 44, 45, and the insertion of new clause 45A to clarify the jurisdiction of each. We recommend removing the reference to the Responsible Lending Code in clause 49(2) to prevent civil remedies being sought regarding a non-binding instrument.

We recommend increasing the cap on statutory damages in sections 89(1)(c) and (d), and 89(2) to $6000, to provide a more effective deterrent (clause 47). We recommend increasing the limits on penalties for offences, as set out in section 103 of the CCCFA, to $200,000 for an individual and $600,000 for a company (clause 58). This amendment would align the penalties with those set out in the Fair Trading Act 1986.

We recommend the addition of new section 108(1A) (clause 60), which would provide a definitive test for when the Court should disregard convictions and other misconduct when considering making a banning order. This test is similar to a test in the Sentencing Act 2002. We also recommend that the offence of obstruction of repossession be removed from the bill.

Infringement offences

We consider that many minor breaches of the CCCFA are difficult to enforce, as they require remedies to be sought through the Courts, which can be costly and time-consuming. We therefore recommend the introduction of an infringement notice regime (new sections 102A (clause 58), 105A to 105F (new clause 59A)), under which infringement notices could be issued by the Commerce Commission. We have restricted infringement offences to breaches involving a minor misconduct and straightforward issues of fact.

More serious offending should lead to a conviction under section 103 (clause 58). Accordingly, we consider that infringement notices would most appropriately be used in response to minor breaches of the disclosure provisions, such as failure to comply with a request for a copy of a creditor’s standard form contract terms.

Oppression

The CCCFA contains provisions for Courts to “reopen” credit contracts where they are found to be oppressive; these provisions relate to all credit contracts. Reopening a credit contract enables the Courts to readjust payments and order the transfer of property between the parties. We recommend amending clause 63 which sets out the matters the Courts must consider when deciding whether to reopen a contract. New paragraph (da) of section 124 would add whether a credit contract is a consumer credit contract as a consideration. Although this section applies to all credit contracts, consumers are more vulnerable than businesses and require greater protection. The amendments to paragraph (g) replace the reference to “comparable arrangements” offered by other creditors with one to “the same or substantially similar” arrangements. We consider this wording provides greater legal certainty. We recommend amending paragraph (j) to align it with the wording in the lender responsibility principles relating to whether agreements are expressed in a clear, concise, and intelligible manner. We recommend amending paragraph (n) to refer to creditors acting “lawfully” rather than “reasonably”.

Financial Service Providers (Registration and Dispute Resolution) Act 2008

The FSPA requires financial service providers (this includes persons providing credit under a credit contract) to be registered. One of the requirements for registration is for providers to become members of an approved dispute resolution scheme. We recommend amending section 5 (new clause 74A) to require persons who are creditors under a credit contract (rather than just those who only provide credit) to be registered. This would ensure that consumers had access to dispute resolution where debts had been on-sold, for example to a debt collection agency.

We recommend inserting new sections 15AA and 18AA (clauses 80 and 84) to clarify the extent of the Financial Market Authority’s powers. This amendment would allow, for example, the authority to prevent overseas financial service providers registering in New Zealand solely to bolster their reputation; we consider this would strengthen New Zealand’s financial regulation regime. We recommend allowing the FMA to act on its own discretion when considering deregistration of a financial service provider; this has resulted in a proposed amendment to section 18A (clause 84). Our recommended amendment to section 34 in clause 87 would allow the Registrar of Financial Service Providers to share information with the Commerce Commission, for, among other purposes, enforcement.

We recommend amending subclause 98(4) to allow requirements for approved dispute resolution scheme rules to be introduced through regulations. New subclause 98(8) is intended to ensure that approved dispute resolution schemes can impose compensation for non-financial matters in relation to repossession complaints. We also recommend that clause 100 be amended to require dispute resolution schemes to communicate with the Commerce Commission if they receive a series of complaints about a single creditor or a class of creditors.

Regulations

Clause 65 of the bill details the regulation-making powers contained in the legislation. The Regulations Review Committee reported to us on the exemption powers contained in new section 138(1)(ab). We have recommended the insertion of new section 138(1AA) which sets out clearly the circumstances in which the exemption power could be exercised. This amendment would ensure that an exemption from the Act’s provisions would be granted only in appropriate circumstances. In line with advice received from the Regulations Review Committee, we recommend inserting a requirement for the Minister's reasons relating to an exemption in regulations made under new section 138(1)(ab) to be published with the regulations.

Application of amendments to existing agreements

We recommend Schedule 1 be amended to clarify that the bill does not apply to existing agreements except in the certain specified circumstances, including the following:

  • disclosure, where a request, variation to an agreement, transfer of a creditor’s rights, or the issue of a continuing disclosure statement occurred on or after the commencement date of the relevant provisions

  • hardship applications made on or after the commencement date of the relevant sections

  • lender responsibility principles where a variation to a contract occurred on or after the commencement of clause 9.

These transitional provisions mean that overlapping regimes will be operating for some time, particularly in the credit fees and repossession areas. However, we point out that repossession is mostly used under short-term credit contracts only, and best practice guidelines enjoin caution before imposing new legal requirements on existing contracts.

Other matters

We gave careful consideration to a number of other matters that did not result in amendments to the bill. Our comments on two of these matters follow.

Interest-rate caps

We are aware that interest-rate caps have recently been implemented in Australia and that similar legislation has been introduced in the United Kingdom. Caps offer a form of consumer protection by setting an upper limit on the amount of interest which can be charged on consumer credit. Whilst restricting interest rates may offer consumers protection from one form of high-cost credit (short-term, high-interest-rate compounding loans) we consider that it may also have unintended consequences. They include restricting access to credit for consumers, and also that the interest-rate which is the upper limit coming to be viewed as a target or “reasonable”. We consider that the provisions included in the bill (and our amendments), especially as they relate to disclosure, unreasonable fees, and responsible lending, would reduce the risk of lenders offering unaffordable credit.

Introducing the Department of Internal Affairs as a regulator of repossession agents

The bill as introduced requires all repossession agents and repossession employees to be licensed, or hold a certificate of approval, under the PSPPIA. This would have the effect of making the Department of Internal Affairs the regulator of the licensing requirements for repossession agents. We understand that this change might cause concern, as private security personnel and private investigators are perceived as having functions distinct from repossession agents. Repossession agents and other occupations included under the Act undertake operations regarding property (including entry to houses) which might put peoples’ property or safety at risk—for example, security alarm consultants are included in the Act. In addition, we understand that some firms which carry out private investigations and security services also carry out repossession services. We therefore consider using the existing licensing regime is appropriate, and point out that regulators would, if required, have the backup of the Police during enforcement.

Labour and Green Party minority view

Labour and Green members welcome this legislation as the long awaited outcome of the review of the CCCFA which was commenced in 2008. This legislation provides greater protection for consumers and we support the significant majority of the provisions in the bill. We continued to be concerned about the delays in providing greater regulation and protection in the consumer credit market. Many vulnerable consumers have been trapped in cycles of debt and despair as a consequence of these delays.

Other credit and default fees

We are disappointed that the provisions in the bill as introduced to clarify the tests for unreasonable credit fees and default fees have been amended in a way that risks a continuing lack of clarity in this area and reduced consumer protection. We believe this is an area that should be reviewed by the Ministry of Business, Innovation and Employment after a couple of years of operation.

Interest-rate caps

The biggest gap in the bill is the failure to include interest-rate caps for third-tier lenders. Interest-rate caps have been introduced in an increasing number of jurisdictions including Canada, the United States, Australia, South Africa, many European countries and Japan. The United Kingdom announced as recently as December 2013 that they would be introducing interest-rate caps on pay-day loans. Interest-rate caps are a necessary element of provisions to protect consumers from predatory and unscrupulous lenders who charge excessive interest rates. Labour and Green members note that it is not uncommon in communities that annual percentage interest rates of over 50 percent, 100 percent, or even higher are standard practice for third-tier lenders. This bill fails to directly address this issue. The stated reasons for not including interest-rate caps do not seem to have been problematic in other jurisdictions. While other elements of the bill will provide greater protection to consumers, the omission of an interest-rate cap will allow excessive interest rates to continue to be offered to some of our most vulnerable consumers.

Enforcement

To ensure the protections provided in the Credit Contracts and Financial Services Law Reform Bill actually improve the conduct of the consumer credit market will require adequate resources provided to inform lenders and borrowers of the changes and to the Commerce Commission to enforce the legislation.

Appendix

Committee process

The Credit Contracts and Financial Services Law Reform Bill was referred to the committee on 17 September 2013. The closing date for submissions was 1 November 2013. We received and considered 70 submissions from interested groups and individuals. We heard 44 submissions, which included holding hearings in Auckland and Wellington.

We received advice from the Ministry of Business, Innovation and Employment. The Regulations Review Committee reported to the committee on the powers contained in clause 9 and clause 65.

Committee membership

Jonathan Young (Chairperson)

Kanwaljit Singh Bakshi

Hon Clayton Cosgrove

Clare Curran

Kris Faafoi

Julie Anne Genter

Mark Mitchell

Hon Chris Tremain

Dr Jian Yang

Carol Beaumont and Alfred Ngaro participated in this item of business.


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Hon Craig Foss

Credit Contracts and Financial Services Law Reform Bill

Government Bill

104—2

Contents

1 Title

2 Commencement

Part 1
Amendments to Credit Contracts and Consumer Finance Act 2003

Subpart 1Amendments to Credit Contracts and Consumer Finance Act 2003

3 Principal Act

4 Section 3 replaced (Purposes)

5 Section 4 amended (Overview)

6 Section 5 amended (Interpretation)

6A Section 8 amended (Meaning of buy-back transaction)

7 New section 8B inserted (Provisions affecting application of amendments to this Act)

8 New section 7A inserted (Credit contract may provide for security interest)

9 New Part 1A inserted

10 Section 10 amended (When this Part applies)

11 Section 11 amended (Meaning of consumer credit contract)

11A Section 14 amended (Effect of declaration)

12 Section 15 amended (Certain contracts not consumer credit contracts)

12A New section 15A inserted (Part does not apply to pawnbroking contract)

12B Section 16 amended (Lease of goods treated as consumer credit contract)

13 Section 17 amended (Initial disclosure)

13A Section 19 amended (Content of continuing disclosure statement)

14 Section 21 amended (Continuing disclosure not required)

15 Section 22 amended (Disclosure of agreed changes)

16 Section 23 amended (Disclosure of changes following exercise of power)

17 Section 24 amended (Request disclosure)

18 Section 25 amended (Disclosure of guarantee)

19 New section 26A inserted (Disclosure of transfer of rights of creditor under consumer credit contract)

20 Section 27 amended (Right to cancel consumer credit contract)

21 Section 30 replaced (Effect of cancellation)

21A Section 31 amended (Effect of credit sale cancellation)

22 Section 32 amended (Disclosure standards)

22A Section 34 replaced (Model forms)

23 Section 40 amended (Default interest charges)

24 Section 41 replaced (Unreasonable credit fee or default fee)

25 Section 43 replaced (Prepayment fees)

26 Section 44 replaced (Other credit fees and default fee)

26 Section 44 replaced (Other credit fees and default fee)

27 Section 45 amended (Fees or charges passed on by creditor)

27A Section 48 amended (Recovery of payments)

28 Section 51 amended (Amount required for full prepayment)

29 Section 52 amended (Rebate of insurance)

30 New sections 52A and 52B inserted

31 Section 55 amended (Changes on grounds of unforeseen hardship)

32 Section 57 amended (Application may not be made in certain circumstances)

33 New section 57A inserted (Obligations of creditor in relation to application)

34 Section 58 amended (Changes by court)

34A New section 59A inserted (How notices may be given)

34B Section 60 amended (Consumer leases)

34C Section 62 amended (Declaration concerning consumer lease)

35 Section 66 repealed (Variation disclosure not required)

36 Section 67 amended (Request disclosure for consumer leases)

37 Section 69 amended (Restrictions on credit-related insurance, repayment waivers, and extended warranties)

38 Section 70 amended (Disclosure of credit-related insurance, repayment waiver, or extended warranty)

39 Section 78 repealed (Variation disclosure not required)

40 Section 79 amended (Request disclosure for buy-back transactions)

41 Section 80 amended (Unreasonable buy-back fees or buy-back default fees)

42 Section 82 amended (Unreasonable fees payable to buy-back promoter or associated person)

43 New Part 3A inserted

44 Section 86 amended (Jurisdiction of District Courts)

45 Section 87 amended (Jurisdiction of Disputes Tribunals)

45A New section 87A inserted (Jurisdiction of dispute resolution schemes)

46 Section 88 amended (Creditors, lessors, transferees, and buy-back promoters liable for statutory damages)

47 Section 89 amended (Amount of statutory damages)

48 Section 90 amended (Enforcement of statutory damages)

48A Section 91 amended (Court may reduce statutory damages)

49 Section 93 amended (Court's general power to make orders)

50 Section 94 amended (Court orders)

51 New section 94A inserted (Court orders in relation to repossessions)

52 Section 95 amended (Miscellaneous provisions concerning court's general power to make orders)

53 Section 96 amended (Injunctions)

54 Section 99 amended (Enforcement of consumer credit contract prohibited)

55 New sections 99A and 99B inserted

56 Section 101 amended (Enforcement of consumer lease prohibited)

57 Section 102 amended (Enforcement of buy-back transaction prohibited)

58 Section 103 amended (Offences)

58 Section 103 replaced (Offences)

59 Section 105 replaced (When proceedings may be commenced for certain offences)

59A New sections 105A to 105F inserted

60 Section 108 amended (Power to order certain persons not to act as creditors, lessors, transferees, or buy-back promoters)

61 Section 111 amended (Role and functions of Commission under this Act)

62 Section 119 amended (Collateral contracts and linked transactions)

63 Section 124 replaced (Guidelines for reopening credit contracts, consumer leases, and buy-back transactions)

64 Section 135 amended (No contracting out)

65 Section 138 amended (Regulations)

66 New section 141A inserted (Application, savings, and transitional provisions relating to amendments to Act)

67 New Schedule 1AA inserted

68 Schedule 1 amended

69 New Schedules 3A and 3B inserted

Subpart 2Consequential amendments to, or repeals of, other Acts

70 Consequential amendments to, or repeals of, other Acts

Part 2
Amendments to Financial Service Providers (Registration and Dispute Resolution) Act 2008

Subpart 1Amendments to Financial Service Providers (Registration and Dispute Resolution) Act 2008

71 Principal Act

72 New section 2A inserted (Purposes of this Act)

73 Section 3 amended (Overview)

74 Section 4 amended (Interpretation)

74A Section 5 amended (Meaning of financial service)

74B Section 7 amended (Application of Act)

74C Subpart 1 heading in Part 2 amended

75 Section 11 amended (No being in business of providing financial service unless registered)

76 Section 12 amended (No holding out that in business of providing financial service unless registered)

77 Section 13 amended (Qualifications for registration as financial service provider)

78 Section 14 amended (Disqualified person)

79 Section 15 amended (Application to be registered as financial service provider)

80 New sections 15AA to 15B inserted

81 Section 16 amended (Registration of financial service provider)

82 Section 17 amended (Duty to notify changes relating to financial service provider)

83 Section 18 amended (Deregistration of financial service provider)

84 New sections 18AA to 18B inserted

84A Section 23 and cross-heading repealed

85 Section 26 amended (Purposes of register)

86 Section 27 amended (Contents of register)

87 Section 34 amended (Sharing information with other persons or bodies)

88 Section 37 amended (Registrar’s inspection powers)

89 Section 42 amended (Appeals from Registrar’s decisions)

89A Section 43 amended (Decisions continue in effect until appeal)

90 Section 48 amended (Financial service provider must be member of dispute resolution scheme)

91 Section 49F amended (Members of dispute resolution scheme must comply with rules and binding resolutions)

92 Section 49G amended (Offence to fail to comply with District Court order)

93 Section 50 amended (Meaning of approved dispute resolution scheme)

94 Section 52 amended (Mandatory considerations for approval)

95 Section 56 amended (Withdrawal of approval)

96 Section 57 amended (Notice of intention to withdraw approval)

97 Section 61 replaced (Effect of withdrawal of approval on members of dispute resolution scheme)

98 Section 63 amended (Rules about approved dispute resolution scheme)

99 Section 66 amended (Minister's consideration of change of rules)

100 Section 67 amended (Duty to co-operate and communicate information in certain circumstances)

101 Subpart 3 of Part 3 repealed

102 Cross-heading above section 78 amended

103 Section 78 amended (Publication of details relating to approved dispute resolution schemes and reserve scheme)

104 Section 78A amended (Levy)

104 Section 78A and cross-heading repealed

105 Section 79 amended (Regulations under this Part)

106 New section 79AA inserted (Appointment of interim dispute resolution scheme)

107 Section 79A amended (Pecuniary order for contravening wholesale certification requirement)

107A Section 79B amended (Compensation for contravention of wholesale certification requirement)

Subpart 2Consequential amendments to other Acts

108 Consequential amendments to other Acts

Schedule 1
New Schedule 1AA inserted

Schedule 2
New Schedules 3A and 3B inserted

Schedule 3
Consequential amendments to, or repeals of, other Acts

Schedule 4
Consequential amendments to other Acts


The Parliament of New Zealand enacts as follows:

1 Title
  • This Act is the Credit Contracts and Financial Services Law Reform Act 2013.

2 Commencement
  • (1) Part 2 and Schedule 4 come into force on 1 July 2014.

    (2) The rest of this Act comes into force on the day that is 6 months after the date on which it receives the Royal assent.

    (1) Sections 3, 65 to 67, 71, and 105 and Schedule 1 (other than clause 2 of Schedule 1AA inserted into the principal Act by that schedule) come into force on the day after the date on which this Act receives the Royal assent.

    (2) The rest of this Act comes into force on a date appointed by the Governor-General by Order in Council, and 1 or more orders may be made bringing different provisions into force on different dates and for different purposes.

    (3) To the extent that it is not previously brought into force under subsection (1) or (2), the rest of this Act comes into force on the day that is 12 months after the date on which this Act receives the Royal assent.

    (4) In this section, provision includes any item, or any part of an item, in any of the schedules.

Part 1
Amendments to Credit Contracts and Consumer Finance Act 2003

Subpart 1Amendments to Credit Contracts and Consumer Finance Act 2003

3 Principal Act
  • This Part amends the Credit Contracts and Consumer Finance Act 2003 (the principal Act).

4 Section 3 replaced (Purposes)
  • Replace section 3 with:

    3 Purposes
    • (1) The primary purpose of this Act is to protect the interests of consumers in connection with credit contracts, consumer leases, and buy-back transactions of land.

      (2) It is also the purpose of this Act—

      • (a) to promote the confident and informed participation in markets for credit by consumers; and

      • (b) to promote and facilitate fair, efficient, and transparent markets for credit; and

      • (c) to protect the interests of consumers under credit contracts, and lessees under consumer leases, and buy-back transactions of land, both when those agreements are entered into and for their duration; and

      • (d) to provide remedies for debtors, lessees, and occupiers (including consumers) in relation to—

        • (i) oppressive credit contracts, consumer leases, and buy-back transactions of land; and

        • (ii) oppressive conduct by creditors under credit contracts, lessors under consumer leases, and transferees under buy-back transactions of land.

      (3) To achieve the purposes referred to in subsections (1) and (2), this Act—

      • (a) requires creditors under consumer credit contracts, lessors under consumer leases, and transferees under buy-back transactions of land to be responsible lenders, both when they provide credit or finance and for the duration of the those agreements; and

      • (b) provides for the disclosure of adequate information to consumers under consumer credit contracts and consumer leases (both before entry into, and before variation of, such agreements)—

        • (i) to enable consumers to distinguish between competing credit or lease arrangements; and

        • (ii) to enable consumers to be informed of the terms of consumer credit contracts or consumer leases before they become irrevocably committed to them; and

        • (iii) to enable consumers to monitor the performance of consumer credit contracts; and

        • (iv) in the case of consumer leases, to make clear to consumers that consumer leases are not consumer credit contracts; and

      • (c) provides rules about interest charges, credit fees, default fees, and payments in relation to consumer credit contracts; and

      • (d) enables consumers to seek reasonable changes to consumer credit contracts on the grounds of unforeseen hardship; and

      • (e) provides for the disclosure of adequate information to consumers under consumer leases to—

        • (i) enable consumers to be informed of the terms of the leases before they become irrevocably committed to them; and

        • (ii) make clear to the consumer that consumer leases are not consumer credit contracts; and

      • (f) provides for the disclosure of adequate information to consumers under buy-back transactions of land and for independent legal advice to those consumers—

        • (i) to inform consumers of the terms, the effects, and the implications of those transactions before they become irrevocably committed to them; and

        • (ii) to enable consumers to monitor the performance of those transactions; and

      • (g) provides rules about fees in relation to buy-back transactions of land; and

      • (h) provides, in relation to credit contracts that include or involve a security interest,—

        • (i) rules that apply in relation to the creditor's rights to repossess consumer goods; and

        • (ii) corresponding rights for consumers and third parties that are affected by the exercise of the creditor's rights; and

      • (i) applies, as appropriate, the requirements, disclosure obligations, rules, and remedies specified in paragraphs (a) to (h) to guarantors.

5 Section 4 amended (Overview)
  • (1) After section 4(a), insert:

    • (ab) Part 1A contains provisions relating to lenders' responsibilities, including provisions for the development of a Responsible Lending Code and requirements to publish information about make publicly available standard form contract terms and information about the costs of borrowing:.

    (2) After section 4(c), insert:

    • (ca) Part 3A contains provisions relating to repossession of consumer goods under credit contracts:.

6 Section 5 amended (Interpretation)
  • (1) In section 5, replace the definition of advance with:

    advance means—

    • (a) money provided to the debtor or to another person to the order of the debtor:

    • (b) a pre-existing monetary obligation of the debtor that is paid, discharged, or consolidated by the creditor:

    • (c) the cash price of any property or services that are—

      • (i) purchased by the debtor from the creditor; or

      • (ii) included in the subject of an agreement between the debtor and the creditor under which the creditor is either debtor either is required to purchase the property or services from the debtor creditor or has an option to make such a purchase:

    • (d) in the case of the use of a credit card to purchase property or services from a person who is not the creditor or to obtain money, the agreed price of the property or services or the monetary amount, as the case may be:

    • (e) in relation to a guarantor, in relation to a credit contract to which Part 3A applies that secures the obligations of the debtor as guarantor under a guarantee, the amount of the guarantor's liability to the creditor under the guarantee.

    (2) In section 5, replace the definition of credit fees with:

    credit fees means fees or charges payable by the debtor under a credit contract, or payable by the debtor to, or for the benefit of, the creditor in connection with a credit contract (including any insurance premiums payable if the creditor requires the debtor to obtain insurance cover from a particular insurer), and—

    • (a) includes—

      • (i) establishment fees:

      • (ii) prepayment fees as defined in section 43(2) (whether in relation to part prepayments or full prepayments):

      • (iia) insurance premiums payable for credit-related insurance if the creditor requires the debtor to obtain insurance cover from a particular insurer or particular insurers:

      • (iii) fees and charges passed on by the creditor to an associated person payable as referred to in section 45 if the other person, body, or agency referred to in that section is an associated person of the creditor; but

    • (b) does not include—

      • (i) interest charges:

      • (ii) charges for an optional service:

      • (iii) default fees or default interest charges:

      • (iv) government charges, duties, taxes, or levies:

      • (v) fees and charges passed on to a person, a body, or an agency that is not an associated person payable as referred to in section 45 if the other person, body, or agency referred to in that section is not an associated person of the creditor.

    (3) In section 5, replace the definition of guarantor with:

    guarantee means a guarantee, indemnity, or liability given, assumed, or undertaken by a guarantor

    guarantor, in relation to a credit contract,—

    • (a) means a natural person who—

      • (i) guarantees the performance of a debtor's obligations under the contract; or

      • (ii) indemnifies a creditor against any loss that the creditor may incur in connection with the contract; or

      • (iii) assumes liability for performing the obligations of a debtor under the contract; but

    • (b) does not include such a person to the extent that the person indemnifies a creditor against any loss that the creditor may incur in connection with the contract under a contract of insurance.

    (3A) In section 5, definition of interest charge, after credit contract, insert (and includes a default interest charge).

    (4) In section 5, definition of security interest, delete , consumer lease,.

    (5) In section 5, insert in their appropriate alphabetical order:

    consumer goods means goods that are used or acquired for use primarily for personal, domestic, or household purposes

    costs of borrowing, in relation to a consumer credit contract or a credit contract to which Part 3A applies, means any or all of the following costs:

    • (a) a credit fee:

    • (b) a default fee:

    • (c) interest charges (including default interest charges)

    costs of the buy-back transaction, in relation to a buy-back transaction, means any or all of the following costs:

    • (a) the rent payable under the right to occupy:

    • (b) the fees and charges that are payable under the transaction

    costs of the lease, in relation to a consumer lease, means any or all of the following costs:

    • (a) payments to be made by the lessee under the lease:

    • (b) fees or charges that are payable on a breach of the lease by the lessee or on the enforcement of the lease by the lessor

    creditor's agent means a person authorised by a creditor to repossess consumer goods on behalf of the creditor, and includes such a person who is an employee of the creditor

    default, in Part 3A, means 1 or more breaches of a credit contract by the debtor sufficient, according to the terms of the agreement contract, to give rise to the creditor’s right to repossess the consumer goods

    dispute resolution scheme means an approved dispute resolution scheme within the meaning of section 50 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008

    financing statement, in Part 3A, has the same meaning as in section 135 of the Personal Property Securities Act 1999

    infringement fee and infringement notice have the meanings set out in section 105A

    infringement offence has the meaning set out in section 102A

    lender has the meaning set out in section 9A

    lender responsibility principles means the principles set out in section 9B(2)

    Minister means the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is for the time being responsible for the administration of this Act

    Ministry means the department of State that, with the authority of the Prime Minister, is for the time being responsible for the administration of this Act

    post-repossession notice means a notice under section 83P

    prescribed means prescribed by regulations made under this Act

    public holiday means a day specified in section 44(1) of the Holidays Act 2003

    purchase money security interest has the same meaning as in section 16(1) of the Personal Property Securities Act 1999

    register of financial service providers means the register of financial service providers established and maintained under the Financial Service Providers (Registration and Dispute Resolution) Act 2008

    repossession means the exercise, or purported exercise, of the creditor's rights under a credit contract relating to consumer goods to take possession of those goods, including or keys and access devices relating to those goods, whether or not the creditor was previously in actual possession of those goods; and repossess has a corresponding meaning

    repossession warning notice means a notice under section 83D

    residential premises means a building, or part of a building, that is a house, flat, townhouse, home unit, or similar dwelling erected, or currently used, primarily and principally as a residence, and includes any land, improvements, or appurtenances belonging to the dwelling or usually enjoyed with it

    Responsible Lending Code or Code means the Code prepared and issued under section 9E and brought into force under section 9F

    standard form contract terms

    • (a) means standard form contract terms that are intended to be contained in an agreement a class of agreements (as defined in section 9A) and that—

      • (i) has have been printed or otherwise prepared by, or on behalf of, the lender; and

      • (ii) is are used by the lender in concluding, or as a basis for concluding, such an agreements; and

    • (b) includes standard form contract terms in of repayment waivers and extended warranties that are related to such agreements.

6A Section 8 amended (Meaning of buy-back transaction)
  • (1) Replace section 8(1)(e) with:

    • (e) the occupier is a natural person; and

    • (f) the relevant finance is to be used, or intended to be used, wholly or predominantly for personal, domestic, or household purposes.

    (2) After section 8(1), insert:

    • (1A) For the purposes of subsection (1)(f), the predominant purpose for which the relevant finance is to be used is—

      • (a) the purpose for which more than 50% of the relevant finance is intended to be used; or

      • (b) if the relevant finance is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.

    • (1B) The reference to intention in subsections (1)(f) and (1A) is a reference to the occupier's intention.

    • (1C) In this section, relevant finance means—

      • (a) the money provided to the occupier or to another person to the order of the occupier in connection with the transaction; or

      • (b) the amount of a payment, discharge, or consolidation of a pre-existing monetary obligation of the occupier in connection with the transaction.

7 New section 5A 8B inserted (Provisions affecting application of amendments to this Act)
  • After section 5 8A, insert:

    5A8B Provisions affecting application of amendments to this Act
    • Schedule 1AA contains application, savings, and transitional provisions relating to amendments made to this Act after 1 January 2013 2014 (see section 141A).

8 New section 7A inserted (Credit contract may provide for security interest)
  • After section 7, insert:

    7A Credit contract may provide for security interest
    • (1) A credit contract may provide for a security interest over consumer goods that are specifically identified in the contract.

      (2) However, despite subsection (1), a credit contract may not provide for a security interest over—

      • (a) consumer goods (other than consumer goods that are subject to a purchase money security) of the following kind:

        • (i) beds and bedding:

        • (ii) cooking equipment, including cooking stoves:

        • (iii) medical equipment:

        • (iv) portable heaters:

        • (v) washing machines:

        • (vi) refrigerators:

      • (b) documents of the following kind:

        • (i) travel documents:

        • (ii) identification documents:

        • (iii) bank cards:

      • (c) any other consumer goods, or documents, prescribed by regulations made under this Act.

      (3) In relation to keys or other devices that enable access to the consumer goods,—

      • (a) a credit contract may not provide for those keys or other devices to be held by, or on behalf of, the creditor prior to repossession of those consumer goods; and

      • (b) neither a creditor nor a creditor's agent may hold such keys or other access devices unless the relevant consumer goods have been repossessed in accordance with this Act.

9 New Part 1A inserted
  • After section 9, insert:

    Part 1A
    Lender responsibilities

    9AA Outline of Part
    • (1) This Part provides for lender responsibility principles that must be complied with by creditors under certain credit contracts and transferees under buy-back transactions.

      (2) In relation to those principles, this Act provides for—

      • (a) the court to make compensation and other orders, or to grant an injunction, in respect of a breach of the principles (see sections 93(aa) and 96(1)(aa)):

      • (b) creditors to make decisions on hardship applications under section 55 in compliance with the principles (see section 57A):

      • (c) creditors to comply with the principles in relation to a repossession of consumer goods (see sections 83C(1)(c) and 83K):

      • (d) a District Court to order persons not to act as creditors, lessors, or transferees if those persons have failed, more than once, to comply with the principles (see section 108(1)(a)(v)):

      • (e) the court to have regard to compliance with the principles when deciding whether to reopen an agreement under Part 5 (see section 124(b)).

      (3) This Part also provides for requirements to make publicly available standard form contract terms and information about the costs of borrowing.

    Interpretation

    9A Interpretation
    • (1) In this Part, unless the context otherwise requires,—

      agreement

      • (a) means—

        • (i) a consumer credit contract:

        • (ii) a buy-back transaction of land:

        • (iii) a credit contract to which Part 3A applies:

        • (iv) a guarantee in respect of a consumer credit contract, or a credit contract, where the contract provides for security over consumer goods that are the subject of that contract; and

      • (b) includes an agreement for credit-related insurance

      agreement means—

      • (a) a consumer credit contract or a credit contract to which Part 3A applies:

      • (b) a buy-back transaction

      borrower means any person who has entered into, or is seeking to enter into, an agreement with a lender

      lender means—

      • (a) a creditor under a consumer credit contract or a credit contract to which Part 3A applies:

      • (b) a lessor:

      • (c) a transferee under a buy-back transaction

      • (d) an insurer in a credit-related insurance agreement.

      relevant guarantee means a guarantee given, or proposed to be given, in respect of—

      • (a) a consumer credit contract; or

      • (b) a credit contract to which Part 3A applies

      relevant insurance contract means, in relation to a lender, a credit-related insurance contract entered into, or to be entered into, by a borrower if—

      • (a) the borrower has also entered into, or is seeking to enter into, an agreement with the lender; and

      • (b) the insurance is arranged by the lender.

      (2) For the purposes of this Part, insurance is arranged by the lender if 1 or more of the following applies:

      • (a) the lender is the insurer:

      • (b) the lender acts as the agent of the insurer in relation to the insurance:

      • (c) the lender receives a commission in relation to the insurance:

      • (d) the lender requires the borrower to obtain the insurance from a particular insurer or particular insurers:

      • (e) the lender has in place any arrangement that has the effect of requiring the borrower to obtain the insurance from a particular insurer or particular insurers:

      • (f) the insurance is financed under the agreement entered into by the borrower and the lender.

    Principles

    9B Lender responsibility principles
    • (1) Every lender must comply with the lender responsibility principles.

      (2) The lender responsibility principles are that every lender must, at all times,—

      • (a) exercise the care, diligence, and skill of a responsible lender—

        • (i) in any advertisement for providing credit or finance under an agreement; and

        • (ii) before entering into an agreement to provide credit or finance and before taking a relevant guarantee; and

        • (iii) in all subsequent dealings with the a borrower in relation to an agreement or a guarantor in relation to a relevant guarantee; and

      • (b) comply with all the lender responsibilities specified in subsections (3), (3A), and (3B).

      (3) The lender responsibilities are that lenders will a lender must, in relation to an agreement with a borrower,—

      • (a) make reasonable inquiries, before entering into the agreement, so as to be satisfied that it is likely that

        • (i) the credit or insurance finance provided under the agreement can be expected to will meet the borrower's requirements and objectives; and

        • (ii) the borrower can be expected to will make the payments under the agreement without suffering substantial hardship; and

      • (b) assist the borrower to reach an informed decision as to whether or not to enter into the agreement and to be reasonably aware of the full implications of entering into the agreement, including by ensuring that—

        • (i) any advertising is not, or is not likely to be, misleading, deceptive, or confusing to borrowers; and

        • (ii) the terms of the agreement are expressed in plain language in a clear, concise, and intelligible manner; and

        • (iii) any information provided by the lender to the borrowers is not presented in a manner that is, or would be likely to be, misleading, deceptive, or confusing; and

      • (c) assist the borrower to reach informed decisions in all subsequent dealings in relation to the agreement, including by ensuring that—

        • (i) any variation to the agreement is expressed in plain language in a clear, concise, and intelligible manner; and

        • (ii) any information provided by the lender to the borrower after the agreement has been entered into is not presented in a manner that is, or would be likely to be, misleading, deceptive, or confusing; and

      • (d) assist a guarantor under an agreement to reach an informed decision as to whether or not to enter into a guarantee, and to be aware of the full implications of entering into the guarantee, by ensuring that—

        • (i) the terms of the guarantee are expressed in a clear, concise and intelligible manner; and

        • (ii) any information provided to guarantors is not presented in a manner that is or would be likely to be misleading, deceptive or confusing; and

      • (e) treat the borrowers and their property (or property in their possession) reasonably and with respect in an ethical manner, including—

        • (i) when breaches of the agreement have occurred or may occur or when other problems arise:

        • (ii) when borrowers a debtor under a consumer credit contract suffers unforeseen hardship (see section 55):

        • (iii) during the a repossession process (including by ensuring taking all reasonable steps to ensure that goods and property are not damaged during the process and, that repossessed goods are adequately stored and protected, and that the right to enter premises is not exercised in an unreasonable manner); and

      • (f) ensure that the terms of the agreement, the circumstances in which the agreement is entered into, and the exercise of the lender's rights or powers under the agreement are not oppressive to the borrower; and

      • (f) ensure, in the case of an agreement to which Part 5 applies, that—

        • (i) the agreement is not oppressive:

        • (ii) the lender does not exercise a right or power conferred by the agreement in an oppressive manner:

        • (iii) the lender does not induce the borrower to enter into the agreement by oppressive means; and

      • (g) meet all their the lender's legal obligations to the borrowers, including under this Act, the Fair Trading Act 1986, the Consumer Guarantees Act 1993, the Financial Service Providers (Registration and Dispute Resolution) Act 2008, and the Financial Advisers Act 2008, which include—

        • (i) obligations in relation to disclosure, credit fees, unforeseen hardship applications, and credit repossession under this Act; and

        • (ii) prohibitions on false or misleading representations and unfair contract terms under the Fair Trading Act 1986; and

        • (iii) the guarantee that the service of providing credit and any other services will be provided carried out with reasonable care and skill as a service under the Consumer Guarantees Act 1993.

      (3A) The lender responsibilities are also that a lender must, in relation to a relevant guarantee that is taken by the lender,—

      • (a) make reasonable inquiries, before the guarantee is given, so as to be satisfied that it is likely that the guarantor will be able to comply with the guarantee without suffering substantial hardship; and

      • (b) assist the guarantor to reach an informed decision as to whether or not to give the guarantee and to be reasonably aware of the full implications of giving the guarantee, including by ensuring that—

        • (i) the terms of the guarantee are expressed in plain language in a clear, concise, and intelligible manner; and

        • (ii) any information provided by the lender to the guarantor is not presented in a manner that is or would be likely to be misleading, deceptive, or confusing; and

      • (c) treat the guarantor reasonably and in an ethical manner, including when breaches of a credit contract to which the guarantee applies have occurred or may occur or when other problems arise; and

      • (d) ensure, in the case of a guarantee that is to be treated as forming part of a credit contract for the purposes of Part 5 under section 119, that—

        • (i) the guarantee is not oppressive:

        • (ii) the lender does not exercise a right or power conferred by the guarantee in an oppressive manner:

        • (iii) the lender does not induce the guarantor to give the guarantee by oppressive means; and

      • (e) meet all the lender's legal obligations to the guarantor, including under the Acts specified in subsection (3)(g).

      (3B) The lender responsibilities are also that a lender must, in relation to a relevant insurance contract,—

      • (a) make reasonable inquiries, before the contract is entered into, so as to be satisfied that it is likely that—

        • (i) the insurance provided under the contract will meet the borrower's requirements and objectives; and

        • (ii) the borrower will make the payments under the contract without suffering substantial hardship; and

      • (b) assist the borrower to reach an informed decision as to whether or not to enter into the contract and to be reasonably aware of the full implications of entering into the contract, including by ensuring that—

        • (i) any advertising distributed by the lender is not, or is not likely to be, misleading, deceptive, or confusing to borrowers; and

        • (ii) any information provided by the lender to the borrower is not presented in a manner that is, or would be likely to be, misleading, deceptive, or confusing.

      (3C) Subsections (3)(b)(iii) and (c)(ii), (3A)(b)(ii), and (3B)(b)(ii) do not apply to information that is subject to section 32(1).

      (4) For the purposes of the inquiries required under subsections (3)(a), (3A)(a), and (3B)(a), the lender may rely on information provided by the borrower or guarantor unless the lender has reasonable grounds to believe the information is not reliable.

    9BA Proceedings for breach of legal obligations under other Acts
    • (1) This section applies if, in relation to a legal obligation referred to in section 9B(3)(g) or (3A)(e),—

      • (a) conduct by a person constitutes a breach of an Act (other than this Act); and

      • (b) proceedings have been commenced under that other Act in respect of that conduct.

      (2) Proceedings may not be commenced under this Act in respect of the same conduct on the basis of a breach of section 9B(3)(g) or (3A)(e).

      (3) Subsection (2) applies unless the court orders otherwise.

      (4) This section does not prevent proceedings from being commenced as a result of a breach of section 9B(2)(a), (3)(a) to (f), or (3A)(a) to (d).

    Responsible Lending Code

    9C Purpose of Responsible Lending Code
    • (1) The purpose of the Responsible Lending Code is to—

      • (a) elaborate on the lender responsibility principles specified in section 9B(2); and

      • (b) offer guidance on how those principles may be implemented by lenders.

      (1A) The Responsible Lending Code is not binding.

      (2) In However, in any proceedings relating to this Act, evidence of a lender's compliance with the provisions of the Responsible Lending Code is to be treated as evidence of compliance with the lender responsibility principles.

    9D Content of Responsible Lending Code
    • (1) In order to achieve its purpose, the Responsible Lending Code may set out any, or all, of the following:

      • (a) the nature and extent of inquiries a lender should make before entering into an agreement:

      • (b) the processes, practices, or procedures that a lender should follow—

        • (i) to verify information provided by a borrower:

        • (ii) to assess whether the relevant agreement is suitable for, and otherwise meets the requirements of, the borrower:

        • (iii) to ensure that advertisements for agreements, products, or services are not misleading, deceptive, or confusing:

        • (iv) to ensure that fees are not unreasonable:

        • (v) to ensure that borrowers and guarantors have sufficient information to enable them to make informed decisions:

      • (b) the processes, practices, or procedures that a lender should follow—

        • (i) to ensure that advertising for providing credit or finance under agreements is not, or is not likely to be, misleading, deceptive, or confusing to borrowers:

        • (ii) when making reasonable inquiries referred to in section 9B(3)(a), (3A)(a), and (3B)(a) so as to be satisfied of the matters referred to in those paragraphs:

        • (iii) to give the assistance referred to in section 9B(3)(b) and (c), (3A)(b), and (3B)(b) (including where the borrower's or guarantor's first language is not English):

        • (iv) to ensure that the lender treats borrowers, guarantors, and their property (or property in their possession) reasonably and in an ethical manner:

        • (v) in the case of an agreement or a guarantee to which Part 5 applies, to ensure that the agreement or guarantee is not oppressive, the lender does not exercise a right or power conferred by the agreement or guarantee in an oppressive manner, and the lender does not induce the borrower to enter into the agreement, or the guarantor to give the guarantee, by oppressive means:

        • (vi) to promote or facilitate compliance with the legal obligations referred to in section 9B(3)(g) and (3A)(e) (for example, by reference to compliance programmes):

        • (vii) to ensure that fees are not unreasonable in terms of section 41, 80, or 82:

      • (bb) the circumstances in which the lender should require or recommend independent legal advice to be obtained:

      • (c) the processes, practices, or procedures that a lender should follow for the purposes of Part 3A:

      • (d) any other matter that promotes or facilitates the lender responsibility principles (set out in section 9B(2)) and that is not inconsistent with any other enactment.

      (2) The Code may also contain different provisions in relation to particular—

      • (a) lenders or classes of lenders:

      • (b) borrowers or classes of borrowers:

      • (c) agreements or classes of agreements.

    How Responsible Lending Code made and administered

    9E Preparation and issue of Responsible Lending Code
    • (1) The Minister must—

      • (a) prepare the Responsible Lending Code; and

      • (b) ensure that the Code is published not later than 2 years after this section comes into force.

      (1) The Minister must prepare and issue the Responsible Lending Code.

      (2) The Minister may use any process that the Minister considers appropriate to develop the Code, but must—

      • (a) publish a draft Code and release it to the public:

      • (b) consult persons, or representatives of such persons, that the Minister considers will be substantially affected by the Code:

      • (c) consider comments received on the draft Code:

      • (d) prepare a revised Code in response to comments received:

      • (e) consult the Minister of Commerce and the Minister of Finance:

      • (f) consider comments received from those Ministers:

      • (g) prepare the final Code issue the Code.

    9F Responsible Lending Code comes into force by notice in Gazette
    • (1) After the Minister has prepared the final version of the Code issued the Code, as provided for in section 9E(2), the Minister must give notice in the Gazette of the date or dates on which the provisions of the Code come into force.

      (2) The notice may state different dates for different provisions, but no date may be before the 28th day after the date on which the notice is published in the Gazette.

      (3) Each provision in the Code comes into force on the date stated in the notice that applies to the provision.

      (4) The Code and the notice are each regulations for the purposes of the Regulations (Disallowance) Act 1989, but are not regulations for the purposes of the Acts and Regulations Publication Act 1989 disallowable instruments, but not legislative instruments, for the purposes of the Legislation Act 2012 and must be presented to the House of Representatives under section 41 of that Act.

      (5) The Ministry must ensure that the Code is available at all reasonable times on an Internet site maintained by or on behalf of the Ministry.

    9G Amendment of Responsible Lending Code
    • (1) The Minister may, at any time, amend or replace the Responsible Lending Code.

      (2) Sections 9E and 9F apply, with any necessary modifications, to any amendment to, or replacement of, the Code.

      (3) However, in the case of a minor amendment that does not materially affect the Code, the Minister need not comply with section 9E(2).

    Publication of standard form contract terms and disclosure of costs of borrowing

    9H Publication of standard terms
    • (1) Every lender who, in relation to an agreement, uses standard terms must ensure that information about those terms is publicly available.

      (2) Without limiting subsection (1),—

      • (a) if the lender has an Internet site, the lender must display prominently and clearly a copy of the standard terms on that site; and

      • (b) if the lender operates from business premises, the lender must display prominently and clearly a copy of the standard terms in a publicly accessible area of those premises.

      (3) The lender must, at the request of any person, supply a copy of its standard terms, free of charge, to that person.

      (4) The information referred to in subsection (1) may be prescribed.

    9H Publication of standard form contract terms
    • (1) Every lender who, in relation to an agreement, uses standard form contract terms must ensure that those terms are publicly available in accordance with this section.

      (2) For the purposes of subsection (1), a lender no longer uses particular standard form contract terms if the lender has ceased to offer agreements that contain those terms.

      (3) For the purposes of subsection (1),—

      • (a) if the lender has an Internet site, the lender must display prominently and clearly a copy of the standard form contract terms on that site; and

      • (b) if the lender operates from business premises that are accessible to the public, the lender must display prominently and clearly on those premises a notice that a copy of those terms is available on request (free of charge).

      (4) The lender must, immediately after receiving the request of any person, supply a copy of its standard form contract terms, free of charge, to that person (regardless of whether subsection (3) applies).

      (5) The lender may, for the purposes of subsection (4), supply the copy by way of an electronic communication if the person who made the request consents to receive the copy in that manner.

    9I Publication of costs of borrowing
    • (1) Every lender must ensure that information about all the costs of borrowing in relation to every type of agreement offered by that lender to a borrower is publicly available.

      (2) Without limiting subsection (1),—

      • (a) if the lender has an Internet site, the lender must display prominently and clearly the lender's fees and annual rates of interest in relation to every type of agreement referred to in subsection (1) on that site; and

      • (b) if the lender operates from business premises, the lender must display prominently and clearly those fees and rates of interest in a publicly accessible area of those premises.

      (3) The publication required under this section must—

      • (a) contain the prescribed information; and

      • (b) be in the prescribed form.

    9I Publication of costs of borrowing
    • (1) Every creditor must ensure that information about all the costs of borrowing in relation to every class of credit contract offered by that creditor is publicly available in accordance with this section.

      (2) In this section, credit contract means a consumer credit contract or credit contract to which Part 3A applies.

      (3) For the purposes of subsection (1),—

      • (a) if the creditor has an Internet site, the creditor must display prominently and clearly on that site the creditor's credit fees, default fees, and annual rates of interest (and default interest charge rates) in relation to every class of credit contract referred to in subsection (1); and

      • (b) if the creditor operates from business premises that are accessible to the public, the creditor must display prominently and clearly on those premises a notice that a copy of the information about those credit fees, default fees, and rates is available on request (free of charge).

      (4) The creditor must, immediately after receiving the request of any person, supply a copy of the information referred to in subsection (1), free of charge, to that person (regardless of whether subsection (3) applies).

      (5) Information about rates of interest may be expressed by reference to a range.

      (6) Information made publicly available under this section must—

      • (a) contain the prescribed information; and

      • (b) be in the prescribed form.

    9IA Extended meaning of business premises
    • (1) In sections 9H and 9I, business premises includes a vehicle, stand, or stall from which goods are offered or exposed for sale, or from which goods may be ordered, if those goods may be sold under a credit sale.

      (2) In subsection (1), vehicle has the same meaning as in section 2(1) of the Land Transport Act 1998.

    9J Application of sections 9H and 9I to repayment waiver or extended warranty
    • Sections 9H and 9I also apply in relation to repayment waivers and extended warranties and, in such cases, a waiver or warranty is to be treated as if it were an agreement.

    9J Application of section 9H to repayment waiver or extended warranty
    • Section 9H also applies with all necessary modifications in relation to repayment waivers and extended warranties as if a repayment waiver or an extended warranty were an agreement.

10 Section 10 amended (When this Part applies)
  • After section 10, insert as subsections (2) and (3):

    • (2) However, this Part does not apply in relation to goods that have been pawned in accordance with the Secondhand Dealers and Pawnbrokers Act 2004 if—

      • (a) the goods are dealt with by a pawnbroker in the ordinary course of the pawnbroker's business; and

      • (b) in the case that the pledger is in default of his or her obligations under the transaction, the pawnbroker's only right of recourse is under section 63 of the Secondhand Dealers and Pawnbrokers Act 2004.

    • (3) In subsection (2), pawnbroker and transaction have the same meanings as in section 4 of the Secondhand Dealers and Pawnbrokers Act 2004.

11 Section 11 amended (Meaning of consumer credit contract)
  • (1) Replace section 11(1)(b) with:

    • (b) the credit is provided to be used, or intended to be provided used, wholly or predominantly for personal, domestic, or household purposes; and.

    (2) After section 11(1), insert:

    • (1A) For the purposes of subsection (1)(b), credit is provided for a predominant purpose if the predominant purpose for which the credit is to be used is

      • (a) the purpose is one for which more than 50% of the credit is intended to be used; or

      • (b) in the case of the credit being if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose is the purpose for which the goods or services are intended to be most used.

    • (1B) The reference to intention in subsections (1)(b) and (1A) is a reference to the debtor's intention.

11A Section 14 amended (Effect of declaration)
  • In section 14(1) and (2), replace primarily with wholly or predominantly.

12 Section 15 amended (Certain contracts not consumer credit contracts)
  • In section 15(1)(a), replace the day the contract is made with the day the contract is entered into.

12A New section 15A inserted (Part does not apply to pawnbroking contract)
  • After section 15, insert:

    15A Part does not apply to pawnbroking contract
    • (1) This Part does not apply to a pawnbroking contract if—

      • (a) the contract was entered into by a pawnbroker in the ordinary course of the pawnbroker's business in accordance with the Secondhand Dealers and Pawnbrokers Act 2004; and

      • (b) in the case that the pledger is in default of his or her obligations under the pawnbroking contract or does not redeem his or her pawned goods on or before the redemption date, the pawnbroker's only right of recourse is under section 63 of the Secondhand Dealers and Pawnbrokers Act 2004.

      (2) In this section, pawnbroker has the same meaning as in section 4 of the Secondhand Dealers and Pawnbrokers Act 2004.

12B Section 16 amended (Lease of goods treated as consumer credit contract)
  • (1) Replace section 16(1)(b) with:

    • (b) the goods are hired, or intended to be hired, wholly or predominantly for personal, domestic, or household purposes; and.

    (2) After section 16(1), insert:

    • (1A) For the purposes of subsection (1)(b), the predominant purpose for which the goods are hired is, if the goods are intended to be used for different purposes, the purpose for which the goods are intended to be most used.

    • (1B) The reference to intention in subsections (1)(b) and (1A) is a reference to the lessee's intention.

13 Section 17 amended (Initial disclosure)
  • (1) Replace section 17(1) with:

    • (1) Every creditor under a consumer credit contract must ensure that disclosure of as much of the key information set out in Schedule 1 as is applicable to the contract is made to every debtor under the contract before the contract is entered into.

    (2) In section 17(2)(a) and (b), replace the contract is made with the contract is entered into.

    (2) In section 17(2), replace contract— with contract before the contract is entered into.

    (3) Repeal section 17(2)(a) and (b).

13A Section 19 amended (Content of continuing disclosure statement)
  • (1) In section 19(h), replace percentages). with percentages); and.

    (2) After section 19(h), insert:

    • (i) in the case of a credit card contract, a prescribed minimum repayment warning (for example, to warn that if the debtor makes only a minimum payment each month, the debtor will pay more interest and it will take the debtor longer to pay off the unpaid balance) and other prescribed information in connection with payments under a credit card contract.

    (3) In section 19, insert as subsection (2):

    • (2) For the purposes of subsection (1)(i),—

      • (a) a credit card contract is a revolving credit contract under which credit is ordinarily obtained only by the use of a credit card:

      • (b) a credit card is—

        • (i) a card of a kind commonly known as a credit card; or

        • (ii) a card of a kind that persons carrying on business commonly issue to their customers, or prospective customers, for use in obtaining goods or services from those persons on credit; or

        • (iii) anything else that may be used as a card referred to in subparagraph (i) or (ii).

14 Section 21 amended (Continuing disclosure not required)
  • Repeal section 21(1)(a).

15 Section 22 amended (Disclosure of agreed changes)
  • (1) In section 22(3), replace Disclosure is not required under this section in relation to a change that— with Despite subsection (2), disclosure may, instead of being made in accordance with that subsection, be made in accordance with subsection (4), but only if the change is one that—.

    (2) Replace section 22(3)(d) with:

    • (d) increases any credit limit under the consumer credit contract.

    (3) After section 22(3), insert:

    • (4) The disclosure referred to in subsection (3) may be made, at the creditor's discretion, either—

      • (a) within 5 working days of the change being made day on which the change takes effect; or

      • (b) if the creditor is required to make continuing disclosure under section 18, at the same time as the creditor provides the debtor with the next continuing disclosure statement (as required under that section) after the change has been made takes effect.

16 Section 23 amended (Disclosure of changes following exercise of power)
  • (1) After section 23(1)(c), insert:

    • (d) the amount of a credit limit under the contract.

    (2) In section 23(5), replace Disclosure is not required under this section in relation to— with Despite subsection (2) (3), disclosure may, instead of being made in accordance with that subsection, be made in accordance with subsection (6), but only in relation to—.

    (3) Repeal section 23(5)(a)(iii).

    (3A) Replace section 23(5)(b) with:

    • (b) a change of any class prescribed by regulations to be a class of change to which this subsection applies.

    (4) After section 23(5), insert:

    • (6) The disclosure referred to in subsection (5) may be made, at the creditor's discretion,—

      • (a) within 5 working days of the change being made day on which the change takes effect; or

      • (b) if the creditor is required to make continuing disclosure under section 18, at the same time as the creditor provides the debtor with the next continuing disclosure statement (as required under that section) after the change has been made takes effect.

17 Section 24 amended (Request disclosure)
  • (1) Replace section 24(2)(g) with:

    • (g) a continuing disclosure statement containing as much of the information specified in section 19 as is applicable to the consumer credit contract for any reasonable statement period specified by the debtor or guarantor.

    (2) After section 24(2), insert:

    • (2AA) Subsection (2)(g) does not apply if, under section 21, disclosure under section 18 is not required.

    • (2A) Every debtor or guarantor under a consumer credit contract may also request in writing that the creditor provides them with a copy of—

      • (a) any disclosure statement that was provided, or that should have been provided, before the date on which the request is made:

      • (b) the creditor's standard form contract terms for the contract (if any):

      • (c) the contract between the debtor and the creditor.

18 Section 25 amended (Disclosure of guarantee)
  • (1) Replace section 25(2) with:

    • (2) The copy of the terms of the guarantee must be given or sent, and disclosure of the key information concerning each consumer credit contract that the creditor and the debtor enter into and to which the guarantee applies at the time the guarantee is given must be made, before the contract is entered into guarantee is given.

    (2) In section 25(3), replace 15 working days of the day on which the contract is made with 5 working days of the day on which the contract is entered into.

19 New section 26A inserted (Disclosure of transfer of rights of creditor under consumer credit contract)
  • After section 26, insert:

    26A Disclosure of transfer of rights of creditor under consumer credit contract
    • (1) Every creditor who transfers (whether by assignment, sale, or other form of disposal or operation of law) the rights of that person under a consumer credit contract to another creditor (the new creditor) must ensure that the disclosure of the following information is made to every debtor and guarantor under the contract:

      • (a) the name, address, and other contact details of the new creditor:

      • (ab) the new creditor's registration number under the register of financial service providers and the name under which the new creditor is registered under that register:

      • (b) the date on which the contract was, or is to be, rights were, or are to be, transferred to the new creditor:

      • (c) the impact (if any) of the transfer on the debtor:

      • (d) that the transfer does not affect the terms of the contract that the debtor entered into (other than terms relating to the identity of the creditor).

      (2) Disclosure under this section must be made within 5 10 working days of the day on which the transfer takes effect.

      (3) This section does not apply in the prescribed circumstances (being circumstances that relate to securitisation or covered bond arrangements or similar arrangements).

20 Section 27 amended (Right to cancel consumer credit contract)
  • In section 27(1), replace 3 working days of with 5 working days after in each place.

21 Section 30 replaced (Effect of cancellation)
  • Replace section 30 with:

    30 Effect of cancellation
    • (1) If a consumer credit contract is cancelled under section 27(1)(b), the following rules apply:

      • (a) the rights and obligations of the parties under the contract cease; and

      • (b) the creditor must, as soon as is reasonably practicable,—

        • (i) return any property that the creditor has received under the contract to the party from whom it was received; and

        • (ii) release every security interest taken in connection with the contract, other than any part of a security interest that—

          • (A) relates to obligations of the debtor or guarantor that are not directly related to the contract; and

          • (B) is capable of being enforced despite paragraph (a); and

      • (c) the creditor must calculate—

        • (i) the amounts due to the creditor, including interest, reasonable credit fees (see section 41), and any costs incurred by the creditor in repairing any damage to the goods; and

        • (ii) the amounts due to the debtor, including any advance paid by the debtor to the creditor; and

      • (d) the difference between the amounts calculated in accordance with paragraph (c) must be paid by the creditor to the debtor, or by the debtor to the creditor, as the case may be.

      (2) The calculation under subsection (1)(c) must be made on the basis that—

      • (a) no debtor under the contract is liable to pay any part of the interest charges, fees, or charges provided for in the contract other than—

        • (i) interest charges on the unpaid balance for the period during which the credit was provided (at the same rate that would have been payable over that period if the contract had not been cancelled); and

        • (ii) any reasonable expenses necessarily incurred by the creditor in connection with the contract and the cancellation of the contract; and

        • (iii) if property is returned to a creditor that has been damaged while in the possession of a debtor, the cost of repairing the damage; and

      • (b) if the debtor has already paid any interest charges, fees, or charges provided for in the contract that the debtor is not liable to pay under paragraph (a), the amount paid is due to the debtor under subsection (1)(c)(ii).

      (3) In addition, if a consumer credit contract is cancelled under section 27(1)(b),—

      • (a) no guarantor under the contract is liable to pay any part of the interest charges, fees, or charges provided for in the contract other than the interest charges, expenses, or costs referred to in subsection (2)(a)(i) to (iii) (if those amounts are payable under the guarantee); and

      • (b) the creditor must repay any interest charges, fees, or charges already received by the creditor from the guarantor that the guarantor is not liable to pay under paragraph (a).

21A Section 31 amended (Effect of credit sale cancellation)
  • In section 31, replace section 30(1)(b) to (e) with section 30(1)(b) to (d) and (3).

22 Section 32 amended (Disclosure standards)
  • (1) After section 32(1)(b), insert:

    • (ba) if required by the regulations, be made in the form prescribed by regulations for the purposes of this paragraph (if any); and.

    (2) After section 32(1), insert:

    • (1A) If subsection (1)(ba) applies and a person gives disclosure in the prescribed form in the manner required by the regulations, the person is to be treated as having complied with the requirements of subsection (1)(a), (c), and (d).

22A Section 34 replaced (Model forms)
  • Replace section 34 with:

    34 Creditor, etc, may voluntarily use model disclosure statement if not required to use mandatory form
    • (1) This section applies if a person is not required to use a form prescribed for the purposes of section 32(1)(ba).

      (2) If the person uses a model disclosure statement prescribed by regulations for the purposes of this section in the manner required by those regulations, the person is to be treated as having complied with the requirements of section 32(1)(a), (c), and (d).

23 Section 40 amended (Default interest charges)
  • (1) In section 40(2)(a), replace and while the default continues with , but only in respect of the amount of the default, and only and while the default continues.

    (2) After section 40(2), insert:

    • (2A) Subsection (2B) applies if—

      • (a) there has been a default in payment under a consumer credit contract; and

      • (b) the consumer credit contract provides that an amount payable under the contract becomes payable (or may be called up as becoming payable) earlier than would be the case if there had not been a default; and

      • (c) the consumer credit contract is not an on demand facility.

    • (2B) The higher rate referred to in subsection (2) may not be imposed on any amount that becomes payable earlier.

    • (2C) In subsection (2A)(c), an on demand facility means a credit contract under which—

      • (a) the total unpaid balance is repayable at any time on demand by the creditor; and

      • (b) there is no agreement, arrangement, or understanding between the creditor and the debtor that repayment will only be demanded on the occurrence or non‑occurrence of a particular event.

24 Section 41 replaced (Unreasonable credit fee or default fee)
  • Replace section 41 with:

    41 Unreasonable credit fee or default fee
    • A consumer credit contract must not provide for a credit fee or a default fee that is unreasonable.

25 Section 43 replaced (Prepayment fees)
  • Replace section 43 with:

    43 Prepayment fees
    • (1) In determining whether a prepayment fee payable is unreasonable, the court must,—

      • (a) if the fee relates to a part prepayment, have regard to whether the fee exceeds a reasonable estimate of the creditorʼs loss arising from the part prepayment; and

      • (b) if the fee relates to a full prepayment, have regard to whether the fee exceeds a reasonable estimate of the creditorʼs loss arising from the full prepayment, as calculated in accordance with section 54.

      (2) For the purposes of this section, a prepayment fee is a fee that relates only to—

      • (a) the early repayment of an amount provided under a credit contract for a fixed-rate loan ; and

      • (b) the portion of the loan that is fixed; and

      • (c) the part of the credit provider’s loss—

        • (i) that arises from the early repayment; and

        • (ii) that is a result of differences in interest rates.

      (3) A prepayment fee may also include the creditor's average reasonable administration costs.

      (4) In this section,—

      fixed-rate loan means a credit contract under which an annual percentage rate is fixed, for an agreed term, for the whole or a part of the amount due under the credit contract

      reasonable administration costs means costs that do not exceed a reasonable estimate of the average reasonable administration cost to the creditor of processing a part, or full, prepayment.

    43 Prepayment fees
    • (1) A prepayment fee payable—

      • (a) on a part prepayment is unreasonable if, and only if, the fee exceeds a reasonable estimate of the creditor's loss arising from the part prepayment:

      • (b) on a full prepayment is unreasonable if, and only if, it exceeds a reasonable estimate of the creditor's loss arising from the full prepayment as calculated in accordance with section 54.

      (2) For the purposes of this section and section 44, a prepayment fee is a fee or charge that relates only to—

      • (a) a part prepayment or a full prepayment in respect of a fixed-rate contract; and

      • (b) the portion of the unpaid balance for which the interest rate is fixed for an agreed period; and

      • (c) the part of the creditor's loss—

        • (i) that arises from the part prepayment or full prepayment; and

        • (ii) that is a result of differences in interest rates.

      (3) A creditor may also, in relation to a part prepayment or a full prepayment, impose a credit fee relating to administrative costs (and whether that fee is unreasonable must be determined in accordance with section 44(1)).

      (4) In this section, fixed-rate contract means a credit contract under which an interest rate is fixed for an agreed period for the whole or a part of the unpaid balance.

26 Section 44 replaced (Other credit fees and default fee)
  • Replace section 44 with:

    44 Credit fees other than establishment fees and prepayment fees
    • (1) In determining whether a credit fee is unreasonable, the court must have regard to—

      • (a) the matters giving rise to the fee; and

      • (b) the amount of the fee; and

      • (c) whether the amount of the fee exceeds a reasonable estimate of the creditor's reasonable average costs that relate directly to—

        • (i) the matters giving rise to the fee; and

        • (ii) the relevant class of contract.

      (2) Subsection (1) does not apply if the credit fee is—

      • (a) an establishment fee (see section 42); or

      • (b) a fee payable on a full or part prepayment of a consumer credit contract (see section 43).

    44A Default fees
    • In determining whether a default fee is unreasonable, the court must have regard to—

      • (a) the nature of the default; and

      • (b) the amount of the fee; and

      • (c) whether that amount exceeds a reasonable estimate of the creditor's reasonable average costs (including the creditor's reasonable administration costs and any financial loss suffered by the creditor) that relate directly to the type of default involved.

26 Section 44 replaced (Other credit fees and default fee)
  • Replace section 44 with:

    44 Credit fees other than establishment fees and prepayment fees
    • (1) In determining whether a credit fee is unreasonable, the court must have regard to, in relation to the matter giving rise to the fee, whether the fee reasonably compensates the creditor for any cost incurred by the creditor (including the cost of providing a service to the debtor if the fee relates to the provision of a service).

      (2) In determining whether the fee reasonably compensates the creditor for any cost referred to in subsection (1), the court must have regard to reasonable standards of commercial practice.

      (3) Subsection (1) does not apply if the credit fee is—

      • (a) an establishment fee (see section 42); or

      • (b) a prepayment fee (see section 43).

    44A Default fees
    • (1) In determining whether a default fee is unreasonable, the court must have regard to, in relation to the matter giving rise to the fee, whether the fee reasonably compensates the creditor for the following:

      • (a) any cost incurred by the creditor:

      • (b) a reasonable estimate of any loss incurred by the creditor as a result of the debtor’s acts or omissions.

      (2) In determining whether the fee reasonably compensates the creditor for any cost and loss referred to in subsection (1), the court must have regard to reasonable standards of commercial practice.

    44B Compliance with Code is evidence that fees are not unreasonable
    • For the purposes of this subpart, evidence of a creditor’s compliance with the provisions of the Responsible Lending Code referred to in section 9D(1)(b)(vii) is to be treated as evidence that a credit fee or a default fee is not unreasonable.

27 Section 45 amended (Fees or charges passed on by creditor)
  • Replace section 45(5) with:

    • (5) Nothing in this section prevents a reasonable commission from being paid, or payable, to a creditor in connection with any credit-related insurance or extended warranty taken out by the debtor.

    • (6) However, despite subsection (5), a creditor must not charge a commission if the creditor

      • (a) the creditor requires the debtor to obtain the insurance or warranty from a particular provider insurer or particular insurers; or

      • (b) the creditor has in place any arrangement that has the effect of requiring the debtor to obtain the insurance or warranty from a particular provider insurer or particular insurers; or

      • (c) the insurance is financed under the credit contract.

27A Section 48 amended (Recovery of payments)
  • Replace section 48(1) with:

    • (1) If a debtor makes any payment to a creditor that, by virtue of this Act, the creditor is not entitled to receive, the creditor must, as soon as practicable,—

      • (a) refund the payment to the debtor; or

      • (b) credit the payment against any amount otherwise owing by the debtor to the creditor.

28 Section 51 amended (Amount required for full prepayment)
  • Replace section 51(1) with:

    • (1) The amount required for the full prepayment of the consumer credit contract must be no more than the sum of the following, less the amount or amounts referred to in section 52 (in the case of a rebate of insurance) or section 52A (in the case of a repayment waiver) 1 or more of sections 52, 52A, and 52B (as applicable):

      • (a) the unpaid balance at the time of the full prepayment; and

      • (ab) a credit fee to reasonably compensate the creditor for any administrative cost incurred by the creditor in relation to the full prepayment (being a credit fee that is not unreasonable under section 41); and

      • (b) a fee or charge that does not exceed a reasonable estimate of the creditor's loss arising from the full prepayment, as calculated in accordance with section 54.

29 Section 52 amended (Rebate of insurance)
  • In section 52(1), replace The amount to be deducted with In the case of a rebate of insurance, the amount to be deducted.

    Replace section 52(1) with:

    • (1) In the case of a consumer credit insurance contract that is financed under the consumer credit contract, an amount to be deducted under section 51 is an amount equal to a proportionate rebate of the premium paid under the insurance contract.

30 New sections 52A and 52B inserted (Rebate of repayment waiver)
  • After section 52, insert:

    52A Rebate of repayment waiver
    • (1) In the case of a repayment waiver, the an amount to be deducted under section 51 is an amount equal to a proportionate rebate of the additional consideration paid for that waiver.

      (2) The rebate must be calculated using the procedure (if any) prescribed for the purposes of this section.

    52B Rebate of extended warranty
    • (1) In the case of an extended warranty, an amount to be deducted under section 51 is an amount equal to a proportionate rebate of the additional consideration paid for that warranty.

      (2) The rebate must be calculated using the procedure (if any) prescribed for the purposes of this section.

31 Section 55 amended (Changes on grounds of unforeseen hardship)
  • After section 55(1), insert:

    • (1A) An application under subsection (1) must—

      • (a) be in writing; and

      • (ab) be given to the creditor; and

      • (b) set out the reasons that have caused the unforeseen hardship.

      • (b) specify the reasonable cause (for example, illness, injury, loss of employment, or the end of a relationship) for the debtor's inability to meet the debtor's obligations under the consumer credit contract.

    • (1B) A debtor who makes an application under this section is not entitled to make another application in relation to the same consumer credit contract unless—

      • (a) the application is made not less than 4 months after a the previous application is made; or

      • (b) in the case of an application that is made within less than 4 months after a the previous application is made,—

        • (i) the creditor agrees to consider the application; or

        • (ii) the reasons for the debtor seeking the change under section 56 are materially different to from the reasons given in the previous application.

32 Section 57 amended (Application may not be made in certain circumstances)
  • (1) Replace section 57(1)(a) with:

    • (a) the debtor is in default of his or her obligation to make payments and the debtor

      • (i) has been in default for 2 weeks or more after receiving a repossession warning notice (see section 83D) or a notice under section 119 of the Property Law Act 2007; or

      • (ii) if a notice referred to in subparagraph (i) has not been served, has failed to make 4 or more consecutive periodic payments by or on the due dates; or

      • (iii) if the situations referred to in subparagraphs (i) and (ii) do not apply, has been in default for 2 months or more.; or.

    (2) Repeal section 57(1)(b).

    (2A) Replace section 57(2) with:

    • (2) However, subsection (1)(a) does not prevent an application being made after the debtor has remedied the default (to the extent that it can be remedied).

    (3) After section 57(2), insert:

    • (3) Nothing in subsection (1) prevents a debtor from making an application if the creditor, at the creditorʼs discretion, agrees that an application may be made.

33 New section 57A inserted (Obligations of creditor in relation to application)
  • After section 57, insert:

    57A Obligations of creditor in relation to application
    • (1) On receipt of an application by a debtor under section 55, the creditor must do the following:

      • (a) within 5 working days after receiving the application, acknowledge receipt of the application by giving a written notice to the debtor:

      • (b) within 10 working days after receiving the application, request any further information from the debtor (but only if that further information is necessary to decide the application) by giving a written notice to the debtor:

      • (c) within 20 working days after receiving the application,—

        • (i) in light of in compliance with the lender responsibility principles (see section 9B), decide whether to grant the application agree to change the consumer credit contract in accordance with the application; and

        • (ii) provide give written notification to the debtor of that decision; and

        • (iii) if the creditor declines the application, provide does not agree to change the consumer credit contract in accordance with the application, give written notice to the debtor setting out—

          • (A) the creditor's reasons for declining the application that decision; and

          • (B) a clear summary of the debtor's rights under section 58.

      (2) However, if the creditor has requested further information in accordance with subsection (1)(b), the time during within which the creditor must comply with subsection (1)(c) is the earlier later of—

      • (a) 10 working days after receiving the further information; and

      • (b) 20 working days after making the request under subsection (1)(b).

      (3) A creditor must not

      • (a) must not charge any credit fee or default interest charge in relation to an application (whatever the outcome of the application) if that fee or charge would not, in the absence of the application, be otherwise payable:

      • (b) commence, or continue, any enforcement action (see section 83G(6), unless the enforcement action is repossessing goods that are at risk (see section 83C(2)).

      • (b) must, if Part 3A applies, comply with section 83G (which prevents enforcement action until the application is decided).

      (4) However, if the application is successful, nothing in subsection (3)(a) prevents a creditor from charging a credit fee that reflects the costs incurred by the creditor in documenting the changes to the credit contract.

34 Section 58 amended (Changes by court)
  • Replace section 58(1) with:

    • (1) A debtor who has made an application under section 55 may apply to the court to change the terms of a consumer credit contract if—

      • (a) the creditor fails, within the time specified in section 57A(1)(c) or (2), to notify the debtor of its decision on the application; or

      • (b) the creditor does not agree to change the consumer credit contract in accordance with the application.

34A New section 59A inserted (How notices may be given)
  • After section 59, insert:

    59A How notices may be given
    • (1) Any notice or other document required or authorised by sections 55 to 57A to be given to any person must be in writing and is sufficiently given if—

      • (a) it is delivered to that person; or

      • (b) it is left at that person’s usual or last known place of residence or business or at an address specified for that purpose in the credit contract; or

      • (c) it is posted in a letter addressed to that person by name at that place of residence or business or address; or

      • (d) it is sent by way of an electronic communication to the address specified by that person for this purpose.

      (2) If the person is absent from New Zealand, the notice or other document may be given to the person’s agent in New Zealand.

      (3) If the person is deceased, the notice or other document may be given to the person’s personal representatives.

      (4) If the person is not known, or is absent from New Zealand and has no known agent in New Zealand, or is deceased and has no personal representatives, the notice or other document must be given in such a manner as may be directed by an order of the court.

      (5) If the notice or other document is sent to any person—

      • (a) by post, it is to be treated as having been received on the fourth working day after the day on which the letter is posted (and in proving the delivery it is sufficient to prove that the letter was properly addressed and posted):

      • (b) by electronic communication, it is to be treated as having been received on the second working day after the day on which the notice or document is sent.

      (6) Despite anything in this section, the court may in any case make an order directing the manner in which any notice or other document is to be given, or make an order dispensing with the giving of the notice or document.

34B Section 60 amended (Consumer leases)
  • (1) Replace section 60(1)(b) with:

    • (b) the goods are hired, or intended to be hired, wholly or predominantly for personal, domestic, or household purposes; and.

    (2) After section 60(1), insert:

    • (1A) For the purposes of subsection (1)(b), the predominant purpose for which the goods are hired is, if the goods are intended to be used for different purposes, the purpose for which the goods are intended to be most used.

    • (1B) The reference to intention in subsections (1)(b) and (1A) is a reference to the lessee's intention.

34C Section 62 amended (Declaration concerning consumer lease)
  • In section 62(1) and (2), replace primarily with wholly or predominantly.

35 Section 66 repealed (Variation disclosure not required)
  • Repeal section 66.

36 Section 67 amended (Request disclosure for consumer leases)
  • After section 67(2)(b), insert:

    • (ba) a copy of the lessor's standard terms (if any), as required under section 9H:.

37 Section 69 amended (Restrictions on credit-related insurance, repayment waivers, and extended warranties)
  • Repeal section 69(3).

38 Section 70 amended (Disclosure of credit-related insurance, repayment waiver, or extended warranty)
  • (1) In section 70(1), replace within 15 working days of the day on which the credit-related insurance is arranged with before the date on which the credit-related insurance is arranged.

    (2) In section 70(2), replace within 15 working days of the day on which the repayment waiver or extended warranty is arranged with before the date on which the repayment waiver or extended warranty is arranged.

39 Section 78 repealed (Variation disclosure not required)
  • Repeal section 78.

40 Section 79 amended (Request disclosure for buy-back transactions)
  • After section 79(2)(b), insert:

    • (ba) a copy of the transferee's standard form contract terms that relate to the buy-back transaction (if any), as required under section 9H:.

41 Section 80 amended (Unreasonable buy-back fees or buy-back default fees)
  • Repeal section 80(2) to (4).

42 Section 82 amended (Unreasonable fees payable to buy-back promoter or associated person)
  • Repeal section 82(2) to (4).

43 New Part 3A inserted
  • After section 83, insert:

    Part 3A
    Repossession of consumer goods under credit contract

    Subpart 1Preliminary provisions

    83A Outline of Part
    • This Part sets out—

      • (a) the rules that apply—

        • (i) before a creditor or creditor’s agent may repossess consumer goods (which includes repossessing keys or other access devices in relation to consumer goods); and

        • (ii) at the time of repossession; and

        • (iii) following the repossession; and

      • (b) the rights and responsibilities of debtors and creditors in relation to consumer goods that have been, or are liable to be, repossessed; and

      • (c) a prohibition against security interests over certain consumer goods.

    83AB References to credit contracts include security agreements
    • (1) This section applies, unless the context otherwise requires, for the purposes of—

      • (a) this Part; and

      • (b) Part 1A (to the extent that it relates to credit contracts to which this Part applies); and

      • (c) any other provision of this Act that relates to—

        • (i) the enforcement, application, or effect of this Part (for example, the definition of repossession in section 5); or

        • (ii) the enforcement, application, or effect of Part 1A (to the extent referred to in paragraph (b)).

      (2) If a security interest in consumer goods is or may be taken in connection with a credit contract,—

      • (a) the contract or arrangement that creates or provides for the security interest is to be treated as forming part of the credit contract; and

      • (b) references to a creditor must be treated as including the secured party within the meaning of section 16 of the Personal Property Securities Act 1999; and

      • (c) references to a debtor must be treated as including the debtor within the meaning of section 16 of the Personal Property Securities Act 1999.

      (3) This Part applies whether or not a financing statement has been registered under the Personal Property Securities Act 1999 in respect of the security interest.

    83B Application of Part
    • (1) This Part applies where a credit contract expressly provides that a creditor has a right to do 1 or more of the following:

      • (a) repossess consumer goods over which there is a security interest:

      • (b) enter premises for the purpose of repossessing consumer goods over which there is a security interest:

      • (c) enter premises when an occupier is not present for the purpose of repossessing consumer goods over which there is a security interest when an occupier is not present.

      (2) The consumer goods referred to in subsection (1) must be—

      • (a) specifically identified in the credit contract (including goods that are subject to a purchase money security interest); or

      • (b) acquired by the debtor after the credit contract has been entered into, but only if,—

        • (i) in relation to the after-acquired consumer goods,—

          • (A) the goods have been specifically identified in the credit contract; and

          • (B) the parties to the contract have, before the creditor exercises any of the rights referred to in subsection (1), agreed to change the contract; and

          • (C) in the case of a consumer credit contract, there has been disclosure of the full particulars of the change as required by section 22; or

        • (ii) the debtor has acquired the goods as a replacement for the goods that were specified in that credit contract.

      (3) Where If a credit contract creates or provides for a security interest in both consumer goods and other goods, this Part applies only in relation to the consumer goods.

      (4) Subsection (1) does not limit subparts 3 and 5A.

      Compare: 1997 No 85 ss 5, 6

    83BA Part does not create right to repossess, etc
    • (1) This Part does not confer a right to repossess consumer goods, or a right to enter premises, or a right to enter premises when an occupier is not present.

      (2) This Part is to be read subject to this section.

      Compare: 1997 No 85 s 6(2), (3)

    Subpart 2Rules that apply before repossession

    83C Circumstances in which creditor can repossess consumer goods
    • (1) Neither a creditor nor a creditor's agent may repossess consumer goods, unless—

      • (a) either—

        • (i) the debtor is in default under the credit contract; or

        • (ii) the goods are at risk; and

      • (b) the creditor has, before taking possession of repossessing the goods, fully complied with requirements imposed on the creditor under this Part that must be complied with before that time; and

      • (c) the creditor complies, in relation to the repossession, with the lender responsibility principles set out in Part 1A that are relevant to the repossession.

      (2) In this section and section 83D Part, consumer goods are at risk if the creditor believes, on reasonable grounds, that those goods have been, or will be, destroyed, damaged, endangered, disassembled, removed, concealed, sold, or otherwise disposed of contrary to the provisions of the relevant credit contract.

      (3) However, consumer goods are not at risk merely because another creditor has, in relation to those consumer goods, given the debtor a repossession warning notice.

      (4) In any case where it is necessary to decide whether the goods were, or are, at risk, the creditor has the onus of proving that the grounds relied on were, or are, reasonable.

      Compare: 1997 No 85 s 7

    83CA Duty to ensure goods are specifically identified
    • (1) A creditor must, before exercising a right referred to in section 83B in relation to consumer goods, ensure that—

      • (a) the goods are specifically identified in the credit contract (whether or not the goods are subject to a purchase money security interest); or

      • (b) if the goods were acquired by the debtor after the credit contract has been entered into,—

        • (i) the following requirements are satisfied:

          • (A) the parties to the contract have agreed to change the contract to specifically identify the goods in the credit contract; and

          • (B) in the case of a consumer credit contract, there has been disclosure of the full particulars of that change as required by section 22; or

        • (ii) the debtor has acquired the goods as a replacement for the goods that were specifically identified in that credit contract.

      (2) For the purposes of determining whether consumer goods are specifically identified,—

      • (a) the goods are specifically identified if the credit contract contains an adequate description of the goods by item that enables the goods to be identified; and

      • (b) it is insufficient to merely describe the goods by kind.

      Compare: 1999 No 126 s 36(1)(b)(i)

    83D Creditor must serve repossession warning notice on debtor and other persons before taking possession of consumer goods
    • (1) Every creditor intending to repossess consumer goods must, before repossessing those goods, provide a notice (a repossession warning notice) to—

      • (a) the debtor; and

      • (b) every guarantor of the debtor under in respect of the relevant credit contract; and

      • (c) if section 83F applies, each of the persons referred to in section 129(1) of the Personal Property Securities Act 1999; and

      • (d) every secured creditor with an interest in those goods (see section 83ZD(1)(a) and (b)).

      • (d) every person who—

        • (i) is known by the creditor to have a security interest in the consumer goods; or

        • (ii) has registered a financing statement in the name of the debtor that refers to the consumer goods; or

        • (iii) has registered a financing statement containing the serial number of the consumer goods as required or authorised by regulations made under the Personal Property Securities Act 1999.

      (2) However, subsection (1) does not apply if the goods are at risk (see section 83C(2)).

      (3) The repossession warning notice must—

      • (a) be in writing; and

      • (b) contain as much of the key information set out in Schedule 3A as is applicable to the credit contract; and

      • (c) include any additional prescribed information; and

      • (d) be in the prescribed form (if any); and

      • (e) be given to the debtor at least 15 days before repossession occurs; and

      • (f) if the default is capable of being remedied, give the debtor at least 15 days before repossession occurs to remedy the default.

      (4) A repossession warning notice expires 28 60 days after it has been served on the debtor and, after that time,—

      • (a) the notice is of no effect; and

      • (b) the creditor has no right to repossess the goods in reliance upon that notice.

      (4A) Any period during which the creditor is prevented from taking or continuing any enforcement action under section 83G must be disregarded when determining whether a repossession warning notice has expired under subsection (4).

      (5) To avoid doubt, nothing Nothing in subsection (4) prevents a creditor from serving a further repossession warning notice that complies with this section.

      Compare: 1997 No 85 ss 8, 9

    83E Debtor may voluntarily return deliver consumer goods
    • (1) A debtor may, following receipt of a repossession warning notice, voluntarily return deliver the consumer goods to the creditor to the relevant place specified in that notice.

      (2) However, a debtor may not voluntarily return consumer goods that are, or include, accessions.

      (2) Subsection (1) is subject to section 83F(2).

      (3) If consumer goods are voluntarily returned delivered in accordance with subsection (1), subpart 5 applies as if the voluntary return delivery were a repossession under subpart 3 4.

      (4) In this section and in section 83F, accessions has the meaning given to it in section 16 of the Personal Property Securities Act 1999.

    83F Application of Personal Property Securities Act 1999 Rules relating to accessions (goods that are installed in, or affixed to, other goods)
    • (1) Every creditor intending to repossess an accession that is a consumer good (as provided for under section 109 of the Personal Property Securities Act 1999) must, in addition to complying with this Part, comply with sections 125 to 131 of that Act.

      (2) Despite section 83E, a debtor may not voluntarily deliver consumer goods that are, or include, accessions.

      (3) In this section, accessions has the meaning given to it in section 16 of the Personal Property Securities Act 1999.

    83G Effect of debtor's complaint or application on grounds of unforeseen hardship on creditor's rights to enforce credit contract
    • (1) Neither a creditor nor a creditor's agent may take any enforcement action in relation to consumer goods (whether under this Part or in accordance with a credit contract) if the debtor has made—

      • (a) a written complaint to the creditor in relation to the any enforcement action and that complaint has not been resolved; or

      • (b) an application to the creditor under section 55 and that application has not been decided.

      (2) If the creditor or creditor's agent has commenced the enforcement action, no further action may be taken in relation to that enforcement action until the complaint has been resolved or the application decided.

      (3) However, despite subsections (1) and (2), if the relevant consumer goods are at risk (see section 83C(2)), the debtor creditor may repossess the goods but must not take any further enforcement action.

      (4) If the creditor and debtor are unable to resolve the complaint, the debtor may, within 14 days of receiving written notice of the creditor's decision on the complaint, refer the complaint to the dispute resolution scheme of which the creditor is a member.

      (4) If the creditor and debtor have not reached agreement and settled the complaint, the creditor may provide the debtor with a written notice that—

      • (a) specifies the creditor's position on the complaint; and

      • (b) states that the notice has been provided for the purposes of this subsection; and

      • (c) states that the debtor may refer the complaint to the creditor's dispute resolution scheme; and

      • (d) contains the name and contact details of that scheme; and

      • (e) states that the complaint will be treated as resolved for the purposes of this section if the debtor does not refer the complaint to that scheme within 14 days of the notice being provided (and, accordingly, the creditor may take or continue enforcement action in relation to the consumer goods).

      (5) For the purposes of this section, a complaint is resolved when—

      • (a) the creditor and debtor have reached agreement and settled the complaint; or

      • (b) the complaint has been—

        • (i) referred to the dispute resolution scheme of which the creditor is a member; and

        • (ii) resolved or otherwise determined in accordance with the scheme's rules (including where the scheme ceases considering the complaint for any reason); or

      • (c) if the creditor has provided the debtor with the written notice referred to in subsection (4),—

        • (i) 14 days have elapsed since the debtor was provided with the notice; and

        • (ii) the debtor has not, within that period, referred the complaint to the dispute resolution service scheme.

      (6) In this section, enforcement action means—

      • (a) giving a repossession warning notice (and includes the content of that notice):

      • (b) giving a repossession notice (and includes the content of that notice):

      • (c) the repossession process.

      (6) In this Part, enforcement action means any of the following:

      • (a) giving a repossession warning notice:

      • (b) repossessing, or entering premises for the purpose of repossessing, consumer goods over which there is a security interest:

      • (c) selling, offering for sale, or disposing of the consumer goods that have been repossessed:

      • (d) any action to recover any amount owing by the debtor to the creditor after the consumer goods are sold under subpart 5 (see sections 83ZC(1)(d) and 83ZG).

      (6A) In this section, an application under section 55 is decided when the creditor gives written notice of the creditor's decision under section 57A(1)(c)(ii).

      (7) To avoid doubt, the creditor or the creditor's agent may, subject to this Part and to any terms on which the complaint was resolved, take, or continue, the enforcement action referred to in subsection (1) from the time that the complaint has been resolved or (in the case of an unsuccessful application under section 55) the application has been decided.

    83GA Subsequent complaints
    • (1) This section applies if—

      • (a) the debtor makes a written complaint to the creditor in relation to an enforcement action (the original complaint); and

      • (b) the debtor subsequently makes another written complaint to the creditor in relation to an enforcement action (the subsequent complaint).

      (2) The subsequent complaint does not, under section 83G, prevent the creditor or a creditor's agent from taking or continuing enforcement action in relation to consumer goods unless—

      • (a) the subsequent complaint is made not less than 4 months after the original complaint is made; or

      • (b) in the case of a subsequent complaint that is made less than 4 months after the original complaint is made,—

        • (i) the creditor agrees to consider the complaint; or

        • (ii) the basis or grounds of the subsequent complaint are materially different from the basis or grounds of the original complaint.

    Subpart 3Disabling devices

    83H Use of disabling device
    • (1) This section applies where a credit contract expressly provides that the creditor—

      • (a) has a security interest over consumer goods to which a disabling device is connected; and

        • (i) that are specifically identified in that contract; and

        • (ii) to which a disabling device is connected; and

      • (b) has a right to activate the disabling device.

      (2) Neither a creditor nor a creditor's agent may activate a disabling device unless—

      • (a) the debtor is in default under the credit contract; and

      • (a) there has been a breach of the credit contract by the debtor that is sufficient, according to the terms of the contract, to give rise to the creditor’s right to activate the disabling device; and

      • (b) the creditor or the creditor's agent has given the debtor reasonable notice, in advance of the activation,—

        • (i) that the disabling device is to be activated; and

        • (ii) about what action the debtor may take to prevent the disabling device being activated.

      (3) A disabling device must not be connected to, or used in connection with, any consumer goods described in section 7A(2)(a).

      (4) In this section and section 83HI,—

      activated, in relation to a disabling device, means that the disabling function of the device has been switched on, with the result that—

      • (a) the debtor is prevented from using the consumer goods; or

      • (b) the debtor's use of the consumer goods is limited; or

      • (c) the creditor is able to locate the consumer goods; or

      • (d) the creditor is able to achieve any other similar outcome that is of a direct or indirect benefit in relation to the relevant credit contract

      disabling device means a device that is attached to consumer goods, the functions of which, when activated, include 1 or more of the following:

      • (a) warning the debtor that repayments on the consumer goods are due, or overdue:

      • (b) preventing the consumer goods from being used:

      • (c) limiting the debtor's use of the consumer goods:

      • (d) enabling the creditor to locate the consumer goods:

      • (e) achieving any other similar outcome that is of direct or indirect benefit to the creditor in relation to the relevant credit contract.

    83HI Connection or use of disabling device in connection with certain goods prohibited
    • (1) A credit contract may not provide for the connection of a disabling device to, or the use of a disabling device in connection with, a consumer good described in section 83ZGA(1)(a).

      (2) A provision of a credit contract that contravenes subsection (1) is of no effect to the extent of the contravention.

      (3) Every creditor under a credit contract must ensure that the contract does not contravene this section.

    Subpart 4Rules that apply at time of repossession

    83I Creditor must allow debtor time to remedy default or at least 15 days to elapse
    • (1) Neither a creditor nor a creditor's agent may repossess consumer goods in respect of which a repossession warning notice has been served unless

      • (a) unless the period for remedying the default specified in the notice has expired and the debtor has failed to remedy the default complained of in so far as it is capable of being remedied; or

      • (b) in a case where the default is not capable of being remedied, at least 15 days have elapsed since the notice was given to the debtor.

      • (b) if the debtor has—

        • (i) voluntarily returned the goods; or

        • (ii) reinstated the agreement by—

          • (A) paying to the creditor the amount required to reinstate the agreement; or

          • (B) where the agreement secures the performance of an obligation other than the payment of money, performing any accrued obligations.

      (2) Neither a creditor nor a creditor's agent may hold keys or other devices that enable access to the consumer goods unless the relevant consumer goods have been repossessed in accordance with this Act.

      (2) Neither a creditor nor a creditor's agent may hold keys or other devices that enable access to the consumer goods unless—

      • (a) the debtor has, after a repossession warning notice has been served, voluntarily made the keys or other device available to the creditor or agent; or

      • (b) the relevant consumer goods have been repossessed in accordance with this Act.

      (3) However, subsection (1) does not apply if the goods are at risk (see section 83C(2)).

      (4) In this section,—

      accrued obligations has the same meaning as in section 83V(2)

      amount required to reinstate the agreement has the same meaning as in section 83V(2), except that paragraph (b) of that definition does not apply.

      Compare: 1997 No 85 s 10

    83J Documents to be produced on entry
    • (1) Every creditor or creditor’s agent who exercises a right of entry of premises must, on first entering the premises if anyone is present, and, if requested, at any subsequent time, produce the following documents:

      • (a) a copy of the repossession warning notice (unless one was not required under section 83D(2)); and

      • (b) a copy of the credit contract; and

      • (c) a copy of the creditor's or creditor's agent’s licence or certificate of approval under the Private Security Personnel and Private Investigators Act 2010, as the case may be; and

      • (ca) in the case of a creditor’s agent, evidence reasonably capable of establishing the person’s authority to repossess the consumer goods on behalf of the creditor; and

      • (d) if a repossession warning notice was not required under section 83D(2), a document setting out the debtor’s name, the address from which the goods will be repossessed, the creditor's or creditor's agent’s licence number (as the case may be) contact details, and the reason why the goods are being repossessed; and

      • (e) a document outlining the requirements—

        • (i) that a creditor or creditor's agent must fulfil in order to repossess goods; and

        • (ii) the debtor’s rights if he or she believes that the creditor or creditor's agent has not met those requirements; and

      • (f) a written statement that specifies that the premises have been entered and the date of entry, and an inventory of consumer goods to be taken; and

      • (g) a written statement setting out where the goods will be stored, the creditor’s contact details, and the debtor’s rights under this Part following the repossession of goods, including the and the debtor's right to make a complaint about the creditor’s or creditor's agent’s conduct; and

      • (h) in the case of a creditor’s agent, evidence reasonably capable of establishing the person’s authority to repossess the consumer goods on behalf of the creditor; and

      • (i) in the case of an entry outside the hours specified in section 83M or on a Sunday or a public holiday, the debtor’s written consent to the exercise of the right of entry.

      (1A) If a document has been produced to a debtor under subsection (1) (whether on first entering the premises or at a subsequent time), the debtor is not entitled to make a subsequent request under subsection (1) for the same document to be produced again.

      (2) If the occupier of the premises is not present when the creditor or creditor's agent enters the premises, the creditor or creditor’s agent must, before leaving the premises, leave a written statement (as required under subsection (1)(f)) in a prominent place, along with a copy of each of the other documents referred to in subsection (1).

      Compare: 1997 No 85 ss 17, 18 s 17

    83JA Entry if occupier not present
    • (1) This section applies if a creditor or creditor’s agent enters premises for the purpose of repossessing consumer goods when the occupier of the premises is not present.

      (2) The creditor or creditor’s agent must, before leaving the premises, leave a notice in writing in a prominent place—

      • (a) specifying that the premises have been entered and the date of entry; and

      • (b) containing an inventory of any consumer goods that have been repossessed; and

      • (c) accompanied by a copy of the documents referred to in section 83J(1) (other than paragraph (f)).

      (3) The creditor or creditor’s agent must take the steps that are reasonably practicable to ensure that the premises are not left obviously open.

      Compare: 1997 No 85 s 18

    83K Creditor must exercise right to enter premises in accordance with lender responsibility principles
    • A creditor must, in exercising the right to enter premises, act in accordance with the lender responsibility principles (see section 9B).

      Compare: 1997 No 85 s 14

    83L Creditor must not enter premises if complaint not resolved or unforeseen hardship application not decided
    • Neither Nothing in this subpart limits section 83G (which provides that neither a creditor nor a creditor's agent may exercise a right to repossess consumer goods or enter premises if the debtor has made a written complaint to the creditor in relation to any enforcement action and that complaint has not been resolved or an application has been made to the creditor under section 55 and that application has not been decided (see section 83G).

    83M Creditor must not enter residential premises at certain times
    • (1) Neither a creditor nor a creditor’s agent may exercise a right to enter residential premises other than between the hours of 6 am and 9 pm.

      (2) A creditor or a creditor's agent who has entered residential premises between the hours of 6 am and 9 pm for the purpose of repossessing consumer goods must not remain at those premises after 9 pm.

      (2A) A creditor or a creditor’s agent must not exercise a right to enter residential premises—

      • (a) at any time on a Sunday; or

      • (b) at any time on a public holiday.

      (3) However, nothing in subsection (1) or, (2), or (2A) prevents a debtor from agreeing, in writing, to permit the creditor or creditor's agent to enter the premises and repossess consumer goods outside the period between the hours of 6 am and 9 pm or at any time on a Sunday or a public holiday, provided that the consent is not sought or given—

      • (a) before the debtor is in default under the credit contract; or

      • (b) when the creditor or the creditor's agent is at the premises to repossess the consumer goods; or

      • (c) outside the period between the hours of 6 am and 9 pm; or

      • (d) at any time on a Sunday; or

      • (e) at any time on a public holiday.

      Compare: 1997 No 85 s 15

    83N Restrictions applying in relation to persons repossessing consumer goods
    • (1) No creditor who is required to be registered under Part 2 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 may exercise any rights in relation to repossessing consumer goods (including entering residential premises) unless that creditor is registered.

      • (a) exercise any rights in relation to repossessing consumer goods (including entering residential premises) unless that creditor is registered:

      • (b) authorise, allow, or permit a repossession agent or repossession employee to repossess consumer goods (including entering residential premises) unless that person is licensed or holds a certificate of approval.

      (1A) No creditor may authorise, allow, or permit a repossession agent or repossession employee to repossess consumer goods (including by entering residential premises) unless that person is licensed or holds a certificate of approval.

      (2) No repossession agent or repossession employee may exercise any rights in relation to repossessing consumer goods (including entering residential premises) unless that person is—

      • (a) specifically authorised to do so by the creditor; and

      • (b) licensed or holds a certificate of approval.

      (2A) If a creditor is not licensed and does not hold a certificate of approval, the creditor may not personally enter residential premises for the purpose of repossessing consumer goods (and any such repossession must be carried out through a repossession agent or repossession employee who meets the requirements of subsection (2)(a) and (b)).

      (3) In this section,—

      certificate of approval means a certificate issued under section 54 of the Private Security Personnel and Private Investigators Act 2010

      licensed means licensed in accordance with Part 2 of the Private Security Personnel and Private Investigators Act 2010

      registered means registered in accordance with Part 2 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008

      repossession agent has the same meaning as in section 8A of the Private Security Personnel and Private Investigators Act 2010

      repossession employee has the same meaning as in section 16A of the Private Security Personnel and Private Investigators Act 2010 (but does not include the creditor).

      Compare: 1997 No 85 s 16

    Subpart 5Rules that apply after repossession of consumer goods

    83O Interpretation
    • In this subpart, unless the context otherwise requires, auction means a process in which goods are offered for sale by auction or by any other bidding process in which the most recent bid made for the goods is disclosed to other participants and potential participants.

    83P Notice to be given to debtor, guarantor, and other creditors after repossession of consumer goods
    • (1) A creditor must serve a post-repossession notice on the debtor and every other person referred to in section 83D(1) within 7 14 days of the repossession.

      (2) The post-repossession notice must—

      • (a) be in writing; and

      • (b) contain as much of the key information set out in Schedule 3A 3B as is applicable to the relevant credit contract; and

      • (c) include any additional prescribed information; and

      • (d) be in the prescribed form (if any).

      (3) If a post-repossession notice is not served as required by this subpart,—

      • (a) the costs of repossessing the consumer goods must be borne by the creditor; and

      • (b) the creditor is not entitled to recover those costs from the debtor or the guarantor.

      Compare: 1997 No 85 ss 20, 21, 22

    83Q Creditor must not sell consumer goods until 15 days after post-repossession notice
    • (1) Where If a creditor has repossessed any consumer goods, the creditor must not sell, offer for sale, or dispose of the consumer goods until after the expiry of 15 days from the date of service of the post-repossession notice on the debtor.

      (2) However, subsection (1) does not apply if—

      • (a) the sale, offer, or disposal was with the written consent of the debtor, and that consent was given after the consumer goods had been taken repossessed; or

      • (b) the debtor requires the creditor to offer the goods for sale within the 15 days; or

      • (c) the disposal was temporary and for the purposes of storage or repair of the goods.

      (3) Where If subsection (2)(b) applies, the creditor must offer the goods for sale as soon as is reasonably practicable after being required to do so by the debtor.

      Compare: 1997 No 85 s 23

    83R Consequences of selling within 15 days of post-repossession notice
    • (1A) This section applies if the creditor contravenes section 83Q(1).

      (1) If the creditor contravenes section 83Q(1), the The liability of the debtor under the credit contract is limited to—

      • (a) the advance under the credit contract; and

      • (b) if the agreement credit contract secures the performance of some obligation other than the payment of money, the performance of that obligation.

      (2) The creditor must repay any money already paid to the creditor by any person on account of, or in satisfaction of, any liability of the debtor in respect of the credit contract not referred to in subsection (1).

      (3) Except as provided for in subsection (1), the debtor's liability to the creditor under the credit contract is extinguished.

      Compare: 1997 No 85 s 24

    83S Creditor must offer consumer goods for sale
    • (1) The creditor must offer the consumer goods for sale as soon as is reasonably practicable after the expiration of 15 days from the date of service of the post-repossession notice on the debtor.

      (2) This section does not apply if—

      • (a) the debtor has made a written complaint in relation to the enforcement action (in which case section 83G applies); or

      • (b) the debtor reinstates the agreement credit contract under section 83V; or

      • (c) the debtor introduces a buyer under section 83X and the buyer completes the purchase of the consumer goods; or

      • (d) the debtor settles the agreement credit contract under section 83Y.

      (3) Despite subsection (2)(a),—

      • (a) after the complaint referred to in that paragraph has been resolved (as referred to in section 83G(5)), the creditor is subject to the duty in subsection (1); but

      • (b) any period during which the creditor is prevented from taking or continuing any enforcement action under section 83G must be disregarded when determining the number of days from the date of service of the post-repossession notice on the debtor.

      Compare: 1997 No 85 s 25

    83T Rules relating to sale by creditor
    • (1) When selling repossessed consumer goods (which may be by any method that meets the requirements of this subsection), the creditor must—

      • (a) ensure that every aspect of the sale, including the manner, time, place, and terms, is commercially reasonable; and

      • (b) use all reasonable efforts to obtain the best possible price for the goods.

      • (b) take reasonable care to obtain the best price reasonably obtainable for the goods as at the time of sale.

      (2) The creditor must give the debtor and every other person referred to in section 83D(1) reasonable notice of the proposed sale (including the method of sale and the time, place, and any reserve price placed on the goods, as applicable to the method of sale).

      (3) If the sale is by auction or tender, the creditor, the debtor, and every other person referred to in section 83D(1) are each entitled to bid or to submit tenders, as the case may be, and if the creditor is the successful bidder or tenderer, the consumer goods, for the purposes of this subpart, are deemed to have been sold for the amount of the creditor’s bid or tender.

      (4) The onus of proving that the consumer goods have been sold in accordance with this section is on the creditor.

      (5) Subsection (1) does not apply if—

      • (a) the debtor introduces a buyer under section 83X and the buyer completes the purchase of the consumer goods; or

      • (b) the debtor forces sale under section 83Z.

      Compare: 1997 No 85 s 26

    83U Debtor may obtain valuation of consumer goods before sale
    • (1) The debtor is entitled to obtain, at the debtor’s expense, 1 valuation of the consumer goods as at the time of repossession.

      (2) The rules relating to valuations are as follows:

      • (a) the valuation may take place at any time after the creditor repossesses the consumer goods, but before the creditor sells or agrees to sell the consumer goods in accordance with this subpart:

      • (b) the debtor must request access to the consumer goods by giving reasonable notice to the creditor:

      • (c) the creditor must permit the debtor’s valuer such access to the consumer goods as is reasonably necessary to enable the valuation of the consumer goods to take place:

      • (d) the debtor’s valuer must carry out the valuation at a reasonable time:

      • (e) the debtor’s valuer has no right to remove the consumer goods unless the creditor gives consent to the removal:

      • (f) the debtor may accompany his or her valuer when the valuation takes place.

      Compare: 1997 No 85 s 27

    83V Debtor’s right to reinstate agreement credit contract
    • (1) The debtor may, at any time after the creditor has repossessed the consumer goods and at any time before the creditor sells or agrees to sell the consumer goods in accordance with this subpart, reinstate the agreement credit contract by—

      • (a) paying to the creditor the amount required to reinstate the agreement contract; or

      • (b) where if the agreement contract secures the performance of an obligation other than the payment of money, performing any accrued obligations.

      (2) In this section,—

      accrued obligations means any obligations that have fallen due for performance under the credit contract and that have not been performed

      amount required to reinstate the agreement contract means the aggregate of—

      • (a) any amounts that have fallen due for payment under the credit contract and that have not been paid, including, without limitation, interest and other charges charges, credit fees, and default fees, but excluding, where the agreement provides that the total advance falls due for payment immediately on the debtor’s default if the contract provides that, in the event of a default, any part of the unpaid balance becomes payable (or may be called up as becoming payable) earlier than would be the case if there had not been a default, that part of the advance unpaid balance that would not have fallen due but for that provision; and

      • (b) the reasonable costs and expenses of the creditor of, and incidental to, repossessing, holding, storing, repairing, maintaining, valuing, and preparing for the sale of the consumer goods and of returning them to the order of the debtor; and

      • (c) the costs reasonably and actually incurred by the creditor in doing anything necessary to remedy any default by the debtor.

      (3) The costs referred to in paragraphs (b) and (c) of the definition of amount required to reinstate the contract are subject to subpart 6 of Part 2 (which applies with all necessary modifications as if any cost that is imposed is a credit fee or a fee or charge to which section 45 applies (as the case may be)).

      Compare: 1997 No 85 s 28

    83W Consequences of reinstating agreement credit contract
    • Where If the right to reinstate the agreement credit contract is exercised under section 83V,—

      • (a) upon receipt of the amount required to reinstate the agreement contract (see section 83V(2)), or confirmation of the performance of the accrued obligations, the creditor must immediately return the consumer goods to the debtor; and

      • (b) the debtor is deemed to receive and hold the returned consumer goods under the terms of the credit contract as if the default had not occurred and the creditor had not repossessed the consumer goods.

      Compare: 1997 No 85 s 29

    83X Debtor’s right to introduce buyer
    • (1) The debtor may, at any time after the creditor has repossessed the consumer goods and at any time before the creditor sells or agrees to sell the consumer goods in accordance with this subpart, require the creditor to sell the consumer goods to any person, introduced by the debtor, who or that is prepared to purchase the consumer goods for cash at a price not less than the estimated value of the consumer goods set out in the post-repossession notice served on the debtor.

      (2) This right may be exercised by giving to the creditor a notice in writing signed by the debtor or the debtor's agent.

      Compare: 1997 No 85 s 30

    83Y Debtor’s right to settle agreement credit contract
    • (1) The debtor may, at any time after the creditor has repossessed the consumer goods and at any time before the creditor sells or agrees to sell the consumer goods in accordance with this subpart, settle the debtor’s obligations under the credit contract—

      • (a) by paying to the creditor the amount required to settle the agreement contract; or

      • (b) where the agreement if the contract secures the performance of an obligation other than the payment of money, by performing that obligation.

      (2) In this section, the amount required to settle the agreement contract means the balance of the advance outstanding, together with any interest charges, credit fees, and default fees and charges payable under the agreement credit contract, and includes—

      • (a) the reasonable costs and expenses of the creditor of, and incidental to, repossessing, holding, storing, repairing, maintaining, valuing, and preparing the sale of the consumer goods and of returning them to the order of the debtor; and

      • (b) the costs reasonably and actually incurred by the creditor in doing anything necessary to remedy any default by the debtor.

      (2A) The costs referred to in subsection (2)(a) and (b) are subject to subpart 6 of Part 2 (which applies with all necessary modifications as if any cost that is imposed is a credit fee or a fee or charge to which section 45 applies (as the case may be)).

      (3) Where If the right to settle the agreement credit contract is exercised,—

      • (a) upon receipt of that amount, or confirmation of the performance of that obligation, the creditor must immediately return the consumer goods to the debtor; and

      • (b) the agreement contract terminates, with the rights and obligations of the parties to it satisfied.

      Compare: 1997 No 85 s 31

    83Z Debtor’s right to force sale
    • (1) If the consumer goods have not been sold within 6 weeks 30 working days, the debtor may require the creditor to put the consumer goods up for sale by auction.

      (2) The period of 6 weeks 30 working days commences with the date on which the creditor repossesses the consumer goods.

      (3) The following rules apply to a sale required under subsection (1):

      • (a) the debtor must require the sale by notice in writing to the creditor, signed by the debtor or the debtor’s agent; and

      • (b) the auction must be held within 2 months after the date that notice is given; and

      • (c) the creditor must give the debtor and every other person referred to in section 83D(1) reasonable notice of—

        • (i) the time and place of the auction; or

        • (ii) if the auction is via the Internet, the times at which the auction will begin and end (including the circumstances (if any) in which the auction may end before the end time given in the notice); and

      • (d) the creditor and the debtor are each entitled to bid at the auction; and

      • (e) there must be no reserve price.

      Compare: 1997 No 85 s 32

    83ZA Disposal of consumer goods to purchaser for value and in good faith
    • (1)  A purchaser for value and in good faith who takes possession of consumer goods sold by a creditor takes the consumer goods free from the following interests:

      • (a) the interest of the debtor:

      • (b) any interest subordinate to that of the debtor:

      • (ba) the interest of the creditor:

      • (c) any interest subordinate to that of the creditor.

      (2) Subsection (1) applies whether or not registrations relating to security interests that are subordinate to the security interest of the creditor selling the consumer goods have been removed from the register of personal property securities established under the Personal Property Securities Act 1999.

      Compare: 1997 No 85 s 32A

    83ZB Extinguishment of creditor's security interest and subordinate security interests on sale
    • If consumer goods have been sold under section 83T or 83Z, all security interests in the consumer goods and their proceeds that are subordinate to the security interest of the creditor who sold the consumer goods are extinguished on the sale of the consumer goods.

      If consumer goods have been sold under section 83T or 83Z, the following interests are extinguished on the sale of the consumer goods:

      • (a) the security interest in the consumer goods and their proceeds of the creditor who sold the consumer goods:

      • (b) all security interests in the consumer goods and their proceeds that are subordinate to the security interest of the creditor who sold the consumer goods.

      Compare: 1997 No 85 s 32B

    83ZC Creditor to give statement of account to debtor, guarantor, and other interested persons
    • (1) Where If consumer goods are sold pursuant to section 83T or 83Z, the creditor must, within 7 days after the sale of the consumer goods, give the debtor and every other person referred to in section 83D(1) a statement of account in writing, showing—

      • (a) the amount of the gross proceeds of sale:

      • (b) the amount of the costs and expenses of, and incidental to, the sale:

      • (c) the amount required to settle the agreement contract under section 83Y as at the date of the sale:

      • (d) the balance owing by the creditor to the debtor, or by the debtor to the creditor, as the case may be.

      (2) If more than 1 item of consumer goods has been sold separately, the statement of account must, if practicable, show the amount of the gross proceeds of sale of each item (as well as a total amount).

      Compare: 1997 No 85 s 33

    83ZD Distribution of surplus
    • (1) If a creditor has sold consumer goods under section 83T or section 83Z, the creditor must pay the following persons the amount of any surplus by satisfying the claims of those persons in the following order:

      • (a) any person who has registered a financing statement in the name of the debtor over the consumer goods that were sold where—

        • (i) the registration was effective immediately before the consumer goods were sold; and

        • (ii) the security interest relating to that registration was subordinate to the security interest of the creditor who sold the consumer goods:

      • (b) any other person who has given the creditor notice that that person claims an interest in the consumer goods that were sold and in respect of which the creditor is satisfied that that person has a legally enforceable interest in the consumer goods:

      • (c) the debtor.

      (2) The security interests to which subsection (1)(a) applies must be paid in the order of their priority as determined by Part 7 or 8 of the Personal Property Securities Act 1999.

      (3) Subsection (1) applies despite the extinguishment of a security interest under section 83ZB.

      Compare: 1997 No 85 s 34

    83ZE Surplus may be paid into court
    • (1) The creditor may pay the surplus into court if there is a question as to who is entitled to receive payment under section 83ZD.

      (2) The surplus may be paid out only on an application by a person claiming an entitlement to the surplus.

      Compare: 1997 No 85 s 34A

    83ZF Debtor’s, etc, right to recover surplus
    • The persons referred to in section 83ZD are entitled to recover the amount of any surplus from the creditor.

      Compare: 1997 No 85 s 34B

    83ZG Limit on creditor’s right to recover from debtor
    • (1) This section applies if—

      • (a) consumer goods (or, where multiple goods are subject to the credit contract, any 1 or more of those goods) are sold under this subpart; and

      • (b) the net proceeds of sale are less than the amount required to settle the agreement contract under section 83Y(2) as at the date of the sale.

      (2) If this section applies, the debtor's liability to the creditor under the credit contract is limited to the difference between the amount required to settle the agreement contract as at the date of the sale and the net proceeds of the sale.

      (3) To avoid doubt,—

      • (a) after the sale, the creditor is not entitled to, and must not claim, any amounts in addition to the amount specified in subsection (2), including—

        • (i) any further interest payments that would, had the sale not taken place, have been payable in respect of the agreement interest credit contract; or

        • (ii) any interest under the Judicature Act 1908; or

        • (iii) any other payments that are in addition to the amount required to settle the agreement contract under section 83Y(2); and

      • (b) where if the sale is of 1 or more goods (but not all the goods) that are subject to the same credit contract, the debtor's liability to the creditor under the agreement contract is the amount referred to in subsection (2); and

      • (c) no interest payments or other payments accrue in respect of any unsold goods (whether or not they have been offered for sale and whether or not they are retained by the debtor) after the date of the sale of the first item under paragraph (b).

      Compare: 1997 No 85 s 35

    Subpart 5AProhibitions relating to security interest over certain consumer goods

    83ZGA Credit contract may not provide for security interest over certain consumer goods
    • (1) A credit contract may not provide for a security interest over—

      • (a) consumer goods of the following kind:

        • (i) beds and bedding:

        • (ii) cooking equipment, including cooking stoves:

        • (iii) medical equipment:

        • (iv) portable heaters:

        • (v) washing machines:

        • (vi) refrigerators:

      • (b) documents of the following kind:

        • (i) travel documents:

        • (ii) identification documents:

        • (iii) bank cards:

      • (c) any other consumer goods, or documents, prescribed by regulations made under this Act.

      (2) Subsection (1)(a) and (c) do not prevent the consumer goods referred to in those paragraphs from being subject to a purchase money security interest.

      (3) Every creditor under a credit contract must ensure that the contract does not contravene this section.

      (4) Nothing in this section prevents a security interest over a good specified in subsection (1)(a)(i) to (vi) that is not a consumer good (for example, a bed that is part of the inventory of a retailer).

    83ZGB Contravening provision of no effect
    • A provision of a credit contract that contravenes section 83ZGA is of no effect to the extent of the contravention.

    83ZGC Exclusion for fixtures
    • Nothing in this subpart applies to a thing that has been affixed to any building or land in such a manner that it becomes part of the structure of the building or otherwise becomes integral to the land.

    Subpart 6Miscellaneous provisions

    83ZH Service of notices
    • (1) Any notice or other document required or authorised by this Part to be served on or given to any person must be in writing and is sufficiently served or given if—

      • (a) it is delivered to that person; or

      • (b) it is left at that person’s usual or last known place of abode residence or business or at an address specified for that purpose in an agreement; or

      • (c) it is posted in a letter addressed to that person by name at that place of abode residence or business or address; or

      • (d) it is sent by way of an electronic communication to the address specified by that person for this purpose.

      (1A) Subsection (1)(d) does not apply to a repossession warning notice or a post-repossession notice.

      (1B) This section does not apply in relation to section 83J.

      (2) If the person is absent from New Zealand, the notice or other document may be served on or given to the person’s agent in New Zealand.

      (3) If the person is deceased, the notice or other document may be served on or given to the person’s personal representatives.

      (4) If the person is not known, or is absent from New Zealand and has no known agent in New Zealand, or is deceased and has no personal representatives, the notice or other document must be served or given in such manner as may be directed by an order of the court.

      (5) If any such notice or other document is sent to any person by registered letter, it is deemed to have been delivered to the person on the fourth day after the day on which it was posted, and in proving the delivery it is sufficient to prove that the letter was properly addressed and posted.

      (5) If the notice or other document is sent to any person—

      • (a) by post, it is to be treated as having been received on the fourth working day after the day on which the letter is posted (and in proving the delivery it is sufficient to prove that the letter was properly addressed and posted):

      • (b) by electronic communication, it is to be treated as having been received on the second working day after the day on which the notice or document is sent.

      (6) Notwithstanding anything in the foregoing provisions of Despite anything in this section, the court may in any case make an order directing the manner in which any notice or other document is to be served or given, or make an order dispensing with the service or giving thereof of the notice or document.

      (7) This section does not apply to notices or other documents served or given in any proceedings in any court.

      Compare: 1997 No 85 s 38

    83ZI Part does not limit application of rules relating to conduct of servants or agents
    • Nothing in this Part limits section 113(b) (which applies section 90 of the Commerce Act 1986 (conduct by servants or agents) for the purposes of this Act)..

44 Section 86 amended (Jurisdiction of District Courts)
  • (1) Replace section 86(2)(b) with: After section 86(2)(b), insert:

    • (ba) in the case of an application for an order under any of the provisions of this Act, the relief claimed does not exceed $200,000; or.

    (2) After section 86(2), insert:

    • (2A) Subsection (2)(b) does not limit subsection (2)(a), (ba), or (c).

45 Section 87 amended (Jurisdiction of Disputes Tribunals)
  • In section 87(1), replace sections 41, 69, 80, 82, 90, 93, 120, and 122 with sections 90, 93, 94A, 120, and 122.

    (2) Repeal section 87(2).

45A New section 87A inserted (Jurisdiction of dispute resolution schemes)
  • After section 87, insert:

    87A Jurisdiction of dispute resolution schemes
    • This subpart does not limit the jurisdiction of a dispute resolution scheme in respect of any statutory obligation under this Act (see section 63(1)(g) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008).

46 Section 88 amended (Creditors, lessors, transferees, and buy-back promoters liable for statutory damages)
  • (1) In the heading to section 88, after Creditors,, insert creditors' agents,.

    (2) After section 88(1), insert:

    • (1A) The debtor under a credit contract is entitled to recover from the creditor under the agreement contract, or the creditor's agent, the amount of the statutory damages set out in section 89 if the creditor, or the creditor's agent, breaches, in connection with the agreement contract, any of the provisions of Part 3A.

    (3) In section 88(6), after consumer credit contract,, insert other credit contract,.

47 Section 89 amended (Amount of statutory damages)
  • (1AA) In section 89(1)(a) and (b), replace and credit fees with , credit fees, and default fees.

    (1AB) In section 89(1)(c) and (d) and (2), replace $3,000 with $6,000.

    (1) In section 89(1)(d)(iii), after consumer credit contract, insert or other credit contract.

    (2) In section 89(4), after consumer credit contract,, insert other credit contract,.

48 Section 90 amended (Enforcement of statutory damages)
  • (1) In section 90(1), after consumer credit contract, insert or other credit contract.

    (2) In section 90(1), after creditor,, insert a creditor's agent,.

    (3) Replace section 90(3) with:

    • (3) An application under this section may be made at any time within 3 years after the matter giving rise to the contravention was discovered or ought reasonably to have been discovered.

48A Section 91 amended (Court may reduce statutory damages)
  • In section 91(1), after consumer credit contract, insert or other credit contract.

49 Section 93 amended (Court's general power to make orders)
  • (1) In section 93, after conduct of any creditor,, insert creditor's agent,.

    (2) Replace section 93(a) with:

    • (aa) a failure to comply with the responsible lending principles (including a failure to comply with the Responsible Lending Code (see Part 1A)):

    • (aa) a breach of any of the provisions of section 9B (lender responsibility principles) or of sections 9H and 9I:

    • (a) a breach of any of the provisions of Part 2, 3, or 3A:.

    (3) In section 93(b), (c), (d), and (e), replace those provisions with the provisions of section 9B, 9H, or 9I or of Part 2, 3, or 3A.

50 Section 94 amended (Court orders)
  • Before After section 94(1)(ac), insert:

    • (aca) an order that—

      • (i) a fee imposed in contravention of sections 41, 69, 80, and or 82, and any interest paid or payable in relation to that fee, must be reduced by a specified amount, in which case—

        • (A) only the reduced fee or interest is payable to the creditor, transferee, buy-back promoter, or associated person (as the case may be); or

        • (B) if the fee or interest has been paid or debited under the consumer contract, the creditor credit contract or buy-back transaction, the creditor, transferee, buy-back promoter, or associated person (as the case may be) must refund the amount by which the fee or interest was reduced; or

      • (ii) no credit fee or, default fee, buy-back fee, buy-back default fee, or other fee may be imposed or debited (in which case no fee, and no interest on that fee, is payable to the creditor, transferee, buy-back promoter, or associated person (as the case may be)); or

      • (iii) if the court makes an order under subparagraph (ii) and the fee or interest has already been paid or debited, the creditor, transferee, buy-back promoter, or associated person must,—

        • (A) if the fee or interest has been paid, refund the amount of that fee and any interest paid in relation to that fee:

        • (B) if the fee or interest has been debited, reverse that transaction:

    • (aacb) in the case of a breach of section 69(1), an order that—

      • (i) the insurance, repayment waiver, or extended warranty be annulled on any terms and conditions that the court thinks fit:

      • (ii) all or part of the premium or any other amount payable in relation to the insurance, repayment waiver, or extended warranty be reimbursed to the debtor or lessee by the creditor or lessor:

    • (aacc) any other order that the court thinks fit for the purpose of giving effect to an order under paragraph (aa) or (ab) (ca) or (cb):.

51 New section 94A inserted (Court orders in relation to repossessions)
  • After section 94, insert:

    94A Court orders in relation to repossessions
    • (1) The court may make all or any of the orders referred to in this section if the court finds that a person (whether or not that person is a party to any proceedings) has suffered loss or damage by the conduct of any creditor, or creditor's agent, that constitutes, or would constitute, a breach of any of the provisions of Part 3A.

      (2) In any proceedings relating to a breach of Part 3A, the court must have regard to the following matters:

      • (a) the conduct of the parties:

      • (b) the nature of the default:

      • (c) any other matters the court considers appropriate.

      (3) The court may make an order granting any relief that is reasonable, and for that purpose

      • (a) relief may be granted on such terms, if any, as to costs, expenses, damages, compensation, penalty, or otherwise as the court, in the circumstances of each case, thinks fit; and

      • (b) in the case of an application relating to a repossession, of relief may include compensation for non-financial loss, stress, humiliation, and inconvenience; and

      • (c) regardless of whether the order involves relief may include a variation in the terms of the credit contract.

      (4) In any legal proceedings in relation to a credit contract after the creditor has repossessed the consumer goods, the court before which such proceedings are brought may, subject to the jurisdiction of the particular court, vary or discharge any judgment or order of any other court against the debtor for recovery of money so far as is necessary to give effect to a set-off against any amount owing to the debtor under the provisions of sections 83ZD and 83ZG.

      Compare: 1997 No 85 ss 12, 13, 36.

52 Section 95 amended (Miscellaneous provisions concerning court's general power to make orders)
  • (1) In section 95(1),—

    • (a) after 93, insert or 94A; and

    • (ab) after consumer credit contract,, insert other credit contract,; and

    • (b) after transaction, insert , as the case may be.

    (2) Replace section 95(2) with:

    • (2) An application for an order under section 93 or 94A may be made at any time within 3 years after the date on which the loss or damage was discovered or ought reasonably to have been discovered.

    (3) In section 95(3), after 93, insert or 94A.

    (4) In section 95(4), after 93, insert or 94A.

53 Section 96 amended (Injunctions)
  • (1) Replace section 96(1)(a) with:

    • (aa) a breach of any of the provisions of section 9B (lender responsibility principles) or of sections 9H and 9I:

    • (a) a breach of any of the provisions of Parts 2, 3, and 3A:.

    (2) In section 96(1)(b), (c), (d), (e), and (f), replace those provisions with the provisions of section 9B, 9H, or 9I or of Part 2, 3, or 3A.

54 Section 99 amended (Enforcement of consumer credit contract prohibited)
  • (1) After section 99(1)(b), insert:

    • (ba) enforce any right in relation to the costs of borrowing; or

    • (bb) require the debtor or any other person to make early repayment of money due under that contract a full prepayment or a part prepayment on the basis of a failure by the debtor or other person to pay the costs of borrowing; or.

    (2) After section 99(1), insert:

    • (1A) Neither the debtor nor any other person is liable for the costs of borrowing in relation to any period during which the creditor has failed to comply with section 17 or 22.

    • (1AA) The period referred to in subsection (1A)

      • (a) starts on the date of the failure; and

      • (b) ends only at the close of the day on which the disclosure under section 17 or 22 is made.

    • (1B) However, subsection (1A) does not apply in relation to fees passed on to a third party (see section 45) unless that third party is an associated person or charges payable as referred to in section 45 unless the other person, body, or agency referred to in that section is an associated person of the creditor.

55 New sections 99A and 99B inserted
  • After section 99, insert:

    99A Enforcement of rights of repossession, etc, prohibited
    • If the notice requirements under section 83D or 83P, as the case may be, have not been complied with, no person creditor that fails to so comply may, before a notice is given, enforce any rights that person the creditor otherwise has under Part 3A.

    99B Enforcement prohibited if creditor unregistered
    • (1) If a creditor who is required to be registered under Part 2 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 is not registered under that Act,—

      • (a) neither the creditor nor any other person may, in relation to a credit contract,—

        • (i) enforce any right in relation to the costs of borrowing; or

        • (ii) require the debtor or any other person to make early repayment of money due under that contract a full prepayment or a part prepayment on the basis of a failure by the debtor or other person to pay the costs of borrowing; and

      • (b) neither the debtor nor any other person is liable for the costs of borrowing in relation to any period during which the creditor is unregistered.

      (2) However, subsection (1)(b) does not apply in relation to fees passed on to a third party (see section 45) unless that third party is an associated person or charges payable to another person, body, or agency as referred to in section 45 unless that person, body, or agency is an associated person of the creditor.

      (3) On becoming registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008, the creditor may enforce the creditorʼ's rights in relation to the costs of borrowing, but only—

      • (a) if the creditor has given written notice to the debtor, containing the information specified in subsection (4); and

      • (b) in relation to the costs of borrowing directly attributable to periods after such notice has been given to the debtor.

      (3A) Subsection (3) is subject to any other provision of this Act that prohibits enforcement of the credit contract.

      (4) The notice required under subsection (3)(a) must clearly inform the debtor—

      • (a) that the creditor is now registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008; and

      • (b) of the date on which the creditor became registered; and

      • (ba) of the name and contact details of the dispute resolution scheme of which the creditor is a member; and

      • (c) that the debtor is, from the date on which the notice was given, liable for the costs of borrowing; and

      • (d) that the debtor has no liability for the costs of borrowing that would otherwise have accrued before the date on which the notice was given.

56 Section 101 amended (Enforcement of consumer lease prohibited)
  • (1) After section 101(b), insert:

    • (ba) enforce any right in relation to the costs of the lease; or

    • (bb) require the lessee or any other person to make early repayment of money due a payment of an amount before that amount is payable under the lease on the basis of a failure by the lessee or other person to pay the costs of the lease; or.

    (2) In section 101, insert as subsections (1A) and (1B) (2) to (4):

    • (1A2) Neither the lessee nor any other person is liable for the costs of the lease in relation to any period during which the lessor has failed to comply with section 64 or 65.

    • (3) The period referred to in subsection (2)

      • (a) starts on the date of the failure; and

      • (b) ends only at the close of the day on which the disclosure under section 64 or 65 is made.

    • (1B4) However, subsection (1A) (2) does not apply in relation to fees passed on to a third party unless that third party is an associated person or charges payable by a lessee for an amount payable, or to reimburse an amount paid, by the lessor to another person, body, or agency unless the person, body, or agency is an associated person of the lessor.

57 Section 102 amended (Enforcement of buy-back transaction prohibited)
  • (1) After section 102(b), insert:

    • (ba) enforce any right in relation to the costs of the buy-back transaction; or

    • (bb) require the occupier or any other person to make early repayment of money due under the lease a payment of an amount before that amount is payable under the buy-back transaction on the basis of a failure by the occupier or other person to pay the costs of the buy-back transaction; or.

    (2) In section 102, insert as subsections (1A) and (1B) (2) to (4):

    • (1A2) Neither the occupier nor any other person is liable for the costs of the buy-back transaction in relation to any period during which the creditor transferee has failed to comply with section 72 or 77.

    • (3) The period referred to in subsection (2)

      • (a) starts on the date of the failure; and

      • (b) ends only at the close of the day on which the disclosure under section 72 or 77 is made.

    • (1B4) However, subsection (1A) (2) does not apply in relation to fees passed on to a third party unless that third party is an associated person or charges payable to another person, body, or agency as referred to in section 81 unless that person, body, or agency is an associated person of the transferee.

58 Section 103 amended (Offences)
  • (1) In section 103, before subsection (1), insert:

    • (1A) Every person who wilfully and forcibly obstructs a creditor or a creditor’s agent who is lawfully exercising any power to repossess consumer goods in accordance with Part 3A commits an offence and is liable on conviction to a fine not exceeding $10,000.

    (2) In section 103(1),— .

    • (a) after creditor,, insert creditor's agent,:

    • (b) replace sections 17 to 69, 71 to 74, with sections 17 to 74, 83C, 83D, 83J, 83M, 83N, and 83X .

    (3) In section 103, in the compare note, after s 40(1), insert ; 1997 No 85 s 19 .

58 Section 103 replaced (Offences)
  • Replace section 103 with:

    102A Infringement offences
    • (1) Every creditor, lessor, or transferee who is subject to a disclosure section commits an offence if—

      • (a) both of the following apply:

        • (i) a paragraph in Schedule 1, 2, or 3 or section 19(1) requires information to be contained in the disclosure statement that is to be given or sent for the purposes of the disclosure section; and

        • (ii) the creditor, lessor, or transferee breaches the disclosure section by failing to include any information in the disclosure statement for the purposes of that paragraph; or

      • (b) the creditor, lessor, or transferee breaches the disclosure section by failing to give or send to the debtor, guarantor, lessee, or occupier any document that is required under that section (other than a disclosure statement) within the time for giving or sending the document that is specified in that section.

      (2) Subsection (1) does not apply to a complete failure to give or send a disclosure statement to a debtor, guarantor, lessee, or occupier in accordance with a disclosure section (but such a breach is an offence under section 103).

      (3) Every creditor, lessor, or transferee who is subject to section 24, 67, or 79 commits an offence if the creditor, lessor, or transferee breaches that section.

      (4) Every lender who is subject to section 9H commits an offence if the lender breaches section 9H(4).

      (5) Every creditor who is subject to Part 3A commits an offence if both of the following apply:

      • (a) a paragraph in Schedule 3A requires information to be contained in the repossession warning notice that is to be provided for the purposes of section 83D; and

      • (b) the creditor breaches section 83D by failing to include any information in the repossession warning notice for the purposes of that paragraph.

      (6) Every creditor or creditor's agent who is subject to Part 3A commits an offence if the creditor or creditor's agent breaches section 83J(1) by failing to produce a document or information referred to in a paragraph of that subsection.

      (7) Subsections (5) and (6) do not apply to a complete failure to give or send a repossession warning notice to a debtor in accordance with section 83D or a complete failure to comply with section 83J(1) (but such a breach is an offence under section 103).

      (8) A person who commits an offence under this section is liable on conviction,—

      • (a) in the case of an individual, to a fine not exceeding $10,000; and

      • (b) in the case of a body corporate, to a fine not exceeding $30,000.

      (9) In this Act, infringement offence means an offence under this section.

      (10) See sections 105A to 105F (which relate to infringement offences).

      (11) In this section, disclosure section means any of sections 17, 18, 25, 64, and 72.

    103 Other offences
    • (1) Every creditor, creditor's agent, lessor, transferee, or buy-back promoter who breaches any of the provisions of sections 17 to 74, 76 to 82, 83C, 83CA, 83D, 83J, 83JA, 83M, 83N, and 83ZGA commits an offence and is liable on conviction,—

      • (a) in the case of an individual, to a fine not exceeding $200,000; and

      • (b) in the case of a body corporate, to a fine not exceeding $600,000.

      (2) However, a breach of section 83C(1)(c) is not an offence under subsection (1).

      (3) Every transferee who breaches section 75 commits an offence and is liable on conviction,—

      • (a) in the case of an individual, to imprisonment for a term not exceeding 1 year or to a fine not exceeding $200,000, or both; and

      • (b) in the case of a body corporate, to a fine not exceeding $600,000.

      (4) Every person who acts in breach of an order made under section 108 commits an offence and is liable on conviction,—

      • (a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000, or both; and

      • (b) in the case of a body corporate, to a fine not exceeding $600,000.

      (5) Conduct that constitutes an offence under section 102A does not constitute an offence under this section.

59 Section 105 replaced (When proceedings may be commenced for certain offences)
  • Replace section 105 with:

    105 When proceedings may be commenced
    • Despite section 14 of the Summary Proceedings Act 1957, proceedings under section 103 may be commenced at any time within 3 years after the matter giving rise to the contravention was discovered or ought reasonably to have been discovered.

      Compare: 1986 No 121 s 40(3)

    105 When proceedings may be commenced
    • Despite anything to the contrary in section 25 of the Criminal Procedure Act 2011, the limitation period in respect of an offence against section 102A or 103 ends on the date that is 3 years after the date on which the matter giving rise to the breach was discovered or ought reasonably to have been discovered.

      Compare: 1986 No 121 s 40(3)

59A New sections 105A to 105F inserted
  • After section 105, insert:

    105A Infringement fee, etc, defined
    • (1) In this Act, unless the context otherwise requires,—

      infringement fee means the amount, not exceeding $2,000, that is prescribed by regulations made under section 105F as the amount payable in respect of an infringement offence for which an infringement notice has been issued

      infringement notice means a notice, in the form prescribed by regulations made under section 105F and issued under section 105C, in respect of an infringement offence.

      (2) See section 102A (which relates to infringement offences).

    105B Infringement offence alleged
    • (1) If a person is alleged to have committed an infringement offence, the person may either—

      • (a) be proceeded against by filing a charging document under section 14 of the Criminal Procedure Act 2011; or

      • (b) be served with an infringement notice.

      (2) Proceedings commenced in the way described in subsection (1)(a) do not require leave of a District Court Judge or Registrar under section 21(1)(a) of the Summary Proceedings Act 1957.

      Compare: 1992 No 122 s 165A

    105C Issue of infringement notice
    • (1) The Commission may issue an infringement notice to a person if the Commission believes on reasonable grounds that the person is committing, or has committed, an infringement offence.

      (2) The Commission may revoke an infringement notice before the infringement fee is paid, or before an order for payment of a fine is made or deemed to be made by a court under section 21 of the Summary Proceedings Act 1957.

      (3) An infringement notice is revoked by giving written notice to the person to whom it was issued that the notice is revoked.

      Compare: 1992 No 122 s 165B

    105D Procedural requirements for infringement notices
    • (1) An infringement notice may be served on a person (a recipient) who is alleged to have committed an infringement offence—

      • (a) by delivering it, or a copy of it, personally to the recipient; or

      • (b) by sending it, or a copy of it, by post, addressed to the recipient at the recipient's last known place of residence or business.

      (2) For the purposes of the Summary Proceedings Act 1957, an infringement notice sent under subsection (1)(b) must be treated as having been served on the recipient on the date it was posted.

      (3) An infringement notice must be in the form prescribed by regulations made under section 105F and must contain—

      • (a) details of the alleged infringement offence that are sufficient to fully and fairly inform the recipient of the time, place, and nature of the alleged infringement offence; and

      • (b) the amount of the infringement fee; and

      • (c) an address at which the infringement fee may be paid; and

      • (d) the time within which the infringement fee must be paid; and

      • (e) a summary of the provisions of section 21(10) of the Summary Proceedings Act 1957; and

      • (f) a statement that the recipient has a right to request a hearing; and

      • (g) a statement of what will happen if the recipient does not pay the fee and does not request a hearing; and

      • (h) any other prescribed matters.

      (4) If an infringement notice has been issued, proceedings in respect of the infringement offence to which the notice relates may be commenced in accordance with section 21 of the Summary Proceedings Act 1957; and in that case, section 21 of the Summary Proceedings Act 1957 applies, with all necessary modifications.

      (5) Reminder notices must be prescribed by regulations made under section 105F and must contain the information referred to in subsection (3).

      Compare: 1992 No 122 s 165C

    105E What Commission does with infringement fees
    • The Commission must pay all infringement fees received into a Crown Bank Account.

      Compare: 1992 No 122 s 165D

    105F Regulations relating to infringement offences
    • The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations for the following purposes:

      • (a) prescribing the form of infringement notices and reminder notices:

      • (b) prescribing any matters that must be included in those notices:

      • (c) prescribing the amount of the infringement fee.

60 Section 108 amended (Power to order certain persons not to act as creditors, lessors, transferees, or buy-back promoters)
  • (1) Replace section 108(1)(a)(v) with:

    • (v) has failed, more than once, to comply with any of the provisions of—

      • (A) this Act (including, to avoid doubt, the lender responsibility principles (see section 9B(2)):

      • (B) the Credit Contracts Act 1981; or

    • (v) has failed, more than once, to comply with any of the provisions of this Act (including, to avoid doubt, the lender responsibility principles (see section 9B(2)):.

    (2) After section 108(1), insert:

    • (1A) However,—

      • (a) a conviction that would otherwise fall within subsection (1)(a)(i) must be disregarded for the purposes of this section if—

        • (i) the conviction was for minor offending; and

        • (ii) the convicted person has no other convictions for offences against this Act involving dishonesty:

      • (b) a reopening that would otherwise fall within subsection (1)(a)(iv) must be disregarded for the purposes of this section if—

        • (i) the matter that gave rise to the reopening was minor misconduct; and

        • (ii) the buy-back promoter has not been connected with any other reopening of a buy-back transaction under section 120.

    • (1A) However, a District Court may not make an order under subsection (1) on the basis of—

      • (a) a conviction referred to in subsection (1)(a)(i) if—

        • (i) the court is satisfied that the direct and indirect consequences of the order would be out of all proportion to the gravity of the offence for which the person was convicted; and

        • (ii) the person has no other convictions for an offence against this Act or for a crime involving dishonesty (as defined in section 2(1) of the Crimes Act 1961):

      • (b) the person being a buy-back promoter referred to in subsection (1)(a)(iv) if—

        • (i) the court is satisfied that the direct and indirect consequences of the order would be out of all proportion to the gravity of any misconduct of the buy-back promoter in connection with the buy-back transaction; and

        • (ii) the buy-back promoter has not been connected with any other reopening of a buy-back transaction under section 120.

61 Section 111 amended (Role and functions of Commission under this Act)
  • (1) After section 111(2)(a), insert:

    • (ab) monitor the conduct of creditors and creditors' agents in the exercise of their rights under Part 3A and under the relevant credit contract; and.

    (2) In section 111(2)(d), after creditors,, insert debtors,.

62 Section 119 amended (Collateral contracts and linked transactions)
  • In section 119(1), after security interest, insert or guarantee in each place.

    After section 119(3), insert:

    • (4) To avoid doubt, for the purposes of this section, another contract or arrangement includes a guarantee.

63 Section 124 replaced (Guidelines for reopening credit contracts, consumer leases, and buy-back transactions)
  • Replace section 124 with:

    124 Guidelines for reopening credit contracts, consumer leases, and buy-back transactions
    • In deciding whether section 120 applies and whether to reopen a credit contract, consumer lease, or buy-back transaction (an arrangement), a the court must, to the extent that the following matters are applicable in the particular circumstances, have regard to:

      • (a) all the circumstances relating to the making of the arrangement, or the exercise of any right or power conferred by the arrangement, or the inducement to enter into the arrangement; and

      • (b) whether the creditor or transferee has, in relation to any aspect of the arrangement (including the creditor's or transferee's conduct in entering into the arrangement), complied with the lender responsibility principles (see section 9B(2)); and

      • (c) the relative bargaining power of the parties; and

      • (d) whether, taking account of the particular indebted person's characteristics of the debtor, lessee, or occupier (for example, his or her age or physical or mental condition), that person, or the personʼ's representative, was reasonably able to protect the indebted that person's interests; and

      • (da) in the case of a credit contract, whether the contract is a consumer credit contract; and

      • (e) whether, before entering into the arrangement, the indebted person debtor, lessee, or occupier obtained independent legal or other professional advice in relation to that arrangement; and

      • (f) whether the credit provider creditor, lessor, or transferee, or any person acting in the interests of that provider that person, subjected the indebted person debtor, lessee, or occupier to unfair pressure or tactics or otherwise unfairly influenced the indebted person debtor, lessee, or occupier to enter into the arrangement and, if so, the nature and extent of that unfair conduct; and

      • (g) the terms of comparable other arrangements offered by other creditors under which the debtor, lessee, or occupier could have obtained the same or substantially similar credit, hired goods, or finance from a person other than the creditor, lessor, or transferee, including—

        • (i) the costs of borrowing, costs of the lease, or costs of the buy-back transaction (as the case may be) under those other arrangements; and

        • (ii) whether the arrangement under consideration imposes significantly more onerous terms on the indebted person debtor, lessee, or occupier than would be imposed under those comparable other arrangements; and

      • (h) the amount payable by the indebted person debtor, lessee, or occupier under the arrangement; and

      • (i) the amount of any payment required as a condition of the full repayment prepayment under the arrangement, including the credit provider's creditor's expenses and the likelihood that the amount repaid could be reinvested on similar terms; and

      • (j) the form of the arrangement, including whether it is expressed in plain language, is legible, and is clearly presented in a clear, concise, and intelligible manner; and

      • (k) whether the terms of the arrangement—

        • (i) allow the indebted person debtor, lessee, or transferee to be reasonably able to comply with his or her obligations under the arrangement; and

        • (ii) are reasonably necessary to protect the interests of the credit provider creditor, lessor, or transferee; and

      • (l) the length of time the indebted person debtor, lessee, or occupier has had to remedy any default; and

      • (m) if the credit provider creditor, lessor, or transferee has refused to release, or has agreed to release subject to conditions, a security interest relating to the arrangement, the obligations secured by the security interest and the extent of security that remains after the release or conditional release; and

      • (n) whether action by the credit provider creditor, lessor, or transferee in relation to the enforcement of, or recovery under, the arrangement was reasonable lawful in the circumstances; and

      • (o) any other matters that the court thinks fit.

      (2) In subsection (1),—

      credit provider means, as the case may be,—

      • (a) the creditor in a credit contract:

      • (b) the lessor of a consumer lease:

      • (c) the transferee in a buy-back transaction

      indebted person means, as the case may be,—

      • (a) a debtor under a credit contract:

      • (b) a lessee under a consumer lease:

      • (c) an occupier under a buy-back transaction.

64 Section 135 amended (No contracting out)
  • After section 135(1), insert:

    • (1A) Section 56 of the Sale of Goods Act 1908 must be read as subject to this section.

65 Section 138 amended (Regulations)
  • (1) After section 138(1)(a), insert:

    • (ab) exempting any credit contract or other agreement or class of credit contract or other agreement from the application of any provision or provisions of this Act, and prescribing the terms and conditions (if any) of the exemption:

    • (ac) prescribing matters for the purposes of section 19(1)(i), including what warning and other information must be contained, how the warning and information must be presented, how amounts or other matters are calculated or determined, and the circumstances (if any) in which the warning or information is not required:.

    (1A) Replace section 138(1)(d) with:

    • (d) prescribing any class of change to a matter to which section 23(5) applies:.

    (2) After section 138(1)(d), insert:

    • (daa) prescribing circumstances for the purposes of section 26A(3):

    • (dab) prescribing matters for the purposes of section 32(1)(ba), including prescribing—

      • (i) 1 or more forms:

      • (ii) when a form must be used:

      • (iii) information or warnings that must be included in the form that are in addition to the key information set out in Schedule 1 or other information required by this Act:

    • (da) prescribing the particular matters required to meet all or any of the requirements under this Act for publication, disclosure, notice, or other provision of information:

    • (db) prescribing the form of statements that must be used to meet all or any of the requirements under this Act for publication, disclosure, notice, or other provision of information:

    • (dc) prescribing how the information to be disclosed must be presented, including, but not limited to, requirements as to the precise manner of disclosure:.

    (2A) In section 138(1)(e), after model disclosure statements, insert for the purposes of section 34.

    (3) In section 138(1)(h), after section 52 insert or 52A.

    (3) After section 138(1)(h), insert:

    • (ha) prescribing, for the purposes of section 52A or 52B, the procedure for calculating a proportionate rebate of any additional consideration paid for a repayment waiver or extended warranty:.

    (3A) After section 138(1)(j), insert:

    • (ja) prescribing consumer goods or documents for the purposes of section 83ZGA(1)(c):.

    (4) After section 138(1), insert:

    • (1AA) Regulations may be made under subsection (1)(a) or (ab) only on the recommendation of the Minister, and the Minister may make a recommendation only if he or she—

      • (a) has had regard to the purposes of this Act set out in section 3; and

      • (b) is satisfied that the exemption would not cause significant detriment to debtors under credit contracts, lessees under consumer leases, or occupiers under buy-back transactions; and

      • (c) is satisfied, in the case of—

        • (i) subsection (1)(a), that compliance with the provisions of this Act relating to consumer credit contracts would, in the circumstances, require a creditor or a class of creditors to comply with requirements that are unduly onerous or burdensome:

        • (ii) subsection (1)(ab), that compliance with the relevant provision or provisions would, in the circumstances, require a creditor, lessor, or transferee or a class of creditors, lessors, or transferees to comply with requirements that are unduly onerous or burdensome.

    • (1AAA) If the Minister makes a recommendation under subsection (1AA) relating to an exemption in regulations made under subsection (1)(a) or (ab), the Minister’s reasons for making the recommendation (including why the exemption is appropriate) must be published together with the regulations.

    • (1AB) Regulations may be made under subsection (1)(daa) only on the recommendation of the Minister, and the Minister may make a recommendation only if he or she is satisfied that the circumstances that are prescribed relate to a securitisation or covered bond arrangement or any similar arrangement.

    • (1A) For the purposes of subsection (1)(dab) to (dc), regulations may prescribe different requirements for different types or classes of disclosure, lender, or transaction persons who are required to make disclosure, contracts, leases, transactions, or other circumstances.

66 New section 141A inserted (Application, savings, and transitional provisions relating to amendments to Act)
  • After section 141, insert:

    141A Application, savings, and transitional provisions relating to amendments to Act
    • The application, savings, and transitional provisions set out in Schedule 1AA, which relate to amendments made to this Act after 1 January 2013 2014, have effect for the purposes of this Act.

67 New Schedule 1AA inserted
  • Before Schedule 1, insert the Schedule 1AA set out in Schedule 1 of this Act.

68 Schedule 1 amended
  • (1AA) In Schedule 1, after paragraph (a), insert:

    • (aa) the trading name of the creditor (if different from its full name specified under paragraph (a)):.

    (1) In Schedule 1, replace paragraph (q) with:

    • (q) a description of any security interest that is or may be taken in connection with the contract, including a clear explanation of—

      • (i) the nature of the security interest; and

      • (ii) the property that is, or is proposed to be, subject to the security interest; and

      • (iii) the extent to which the debtor's obligations to the creditor are secured by the security interest, including whether, if the creditor's rights under the security were to be exercised, the debtor would, or may, remain indebted to the creditor (if there is a shortfall in the proceeds of the sale of the property that is subject to the security interest); and

      • (iv) what the consequences would be if the debtor were to give a security interest over the property referred to in subparagraph (ii) to a person other than the creditor and, as a result, particularly if the debtor were to be in breach of the contract, including whether the property that would be subject to the security interest would be liable to repossession:

    • Disabling devices
    • (qa) whether a disabling device is to be attached to the consumer goods that are subject to a security interest referred to in paragraph (q) and, if so, a clear description of—

      • (i) how the device functions; and

      • (ii) when the device might be activated; and

      • (iii) how, if the consumer goods are required in an emergency situation, the debtor may obtain the use of the goods:.

    (2) In Schedule 1, replace paragraph (s) with:

    • (s) a statement of the debtorʼ's cancellation rights under section 27:

    • Debtorʼ's right to apply for relief on grounds of unforeseen hardship
    • (sa) a statement of the debtorʼ's right under section 55, and advice as to how such an application under that section may be made:.

    (3) In Schedule 1, after paragraph (u), insert:

    • Dispute resolution
    • (ua) the name and contact details of the dispute resolution scheme of which the creditor is a member (unless the Financial Service Providers (Registration and Dispute Resolution) Act 2008 does not require the creditor to be a member of such a scheme):

    • Registration under Financial Service Providers (Registration and Dispute Resolution) Act 2008
    • (ub) the creditor's registration number under the register of financial service providers:

    • (uc) the name under which the creditor is registered on that register:.

69 New Schedules 3A and Schedule 3B inserted
  • After Schedule 3, insert the Schedules 3A and Schedule 3B set out in Schedule 2 of this Act.

Subpart 2Consequential amendments to, or repeals of, other Acts

70 Consequential amendments to, or repeals of, other Acts
  • Amend or repeal the Acts specified in Schedule 3 as set out in that schedule.

Part 2
Amendments to Financial Service Providers (Registration and Dispute Resolution) Act 2008

Subpart 1Amendments to Financial Service Providers (Registration and Dispute Resolution) Act 2008

71 Principal Act
  • This Part amends the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the principal Act).

72 New section 2A inserted (Purposes of this Act)
  • After the Part 1 heading, insert:

    2A Purposes of this Act
    • The purposes of this Act are—

      • (a) to promote the confident and informed participation of businesses, investors, and consumers in the financial markets; and

      • (b) to promote and facilitate the development of fair, efficient, and transparent financial markets.

73 Section 3 amended (Overview)
  • (1) In section 3(2), replace In order to be registered, financial with Within 5 working days of being registered,Financial.

    (2) In section 3(3), replace , why the approval might be withdrawn, and how a dispute resolution scheme may be appointed as the reserve scheme with and why the approval might be withdrawn.

    (3) Repeal section 3(4).

74 Section 4 amended (Interpretation)
  • (1) In section 4, definition of credit contract, repeal paragraph (b)(ii).

    (1A) In section 4, definition of credit contract, paragraph (b)(iii), after no interest charges, insert , and no credit fees,.

    (2) In section 4, insert in its their appropriate alphabetical order:

    creditor has the same meaning as in section 5 of the Credit Contracts and Consumer Finance Act 2003

    FMA means the Financial Markets Authority established under Part 2 of the Financial Markets Authority Act 2011

    levy means a levy prescribed by regulations made under section 68 of the Financial Markets Authority Act 2011.

    (3) In section 4, repeal the definitions of affiliated entity and responsible financial service provider.

74A Section 5 amended (Meaning of financial service)
  • In section 5(e), replace providing credit with being a creditor.

74B Section 7 amended (Application of Act)
  • Repeal section 7(2)(g).

74C Subpart 1 heading in Part 2 amended
  • In Part 2, in the subpart 1 heading, after registered, insert and member of approved dispute resolution scheme.

75 Section 11 amended (No being in business of providing financial service unless registered)
  • (1) In the heading to section 11, after registered, insert and member of approved dispute resolution scheme.

    (2) Replace section 11(1) with:

    • (1) A person to whom this Act applies must not be in the business of providing a financial service unless that person—

      • (a) is registered for that service under this Part; and

      • (b) is, if required by section 48, a member of an approved dispute resolution scheme.

76 Section 12 amended (No holding out that in business of providing financial service unless registered)
  • (1) In the heading to section 12, after registered, insert and member of approved dispute resolution scheme.

    (2) Replace section 12(1) with:

    • (1) A person to whom this Act applies must not—

      • (a) hold out that the person is registered under this Act unless that person—

        • (i) is registered under this Part; and

        • (ii) is, if required by section 48, a member of an approved dispute resolution scheme; or

      • (b) hold out that the person is registered in respect of a particular service or entitled, qualified, able, or willing to be in the business of providing a financial service unless that person—

        • (i) is registered for that service under this Part; and

        • (ii) is, if required by section 48, a member of an approved dispute resolution scheme.

77 Section 13 amended (Qualifications for registration as financial service provider)
  • Repeal section 13(b).

78 Section 14 amended (Disqualified person)
  • (1) After section 14(2)(e), insert:

    • (ea) a person who has been convicted within the last past 5 years, in a country other than New Zealand, of an offence that is comparable substantially similar to an offence specified in paragraph (e):.

    (2) In section 14(2)(f), after financing of terrorism, insert , whether in New Zealand or elsewhere.

79 Section 15 amended (Application to be registered as financial service provider)
  • Repeal section 15(1)(a)(ii).

80 New section 15A inserted (Registrar may refer application to FMA) New sections 15AA to 15B inserted
  • After section 15, insert:

    15AA Purpose of FMA's powers relating to registration
    • The purpose of section 15A is to prevent a person (A) from being registered as a financial service provider if such registration has, will have, or is likely to have the effect of—

      • (a) creating, or causing the creation of, a false or misleading appearance with respect to the extent to which A—

        • (i) provides, or will provide, financial services in New Zealand; or

        • (ii) provides, or will provide, financial services from a place of business in New Zealand; or

        • (iii) is, or will be, regulated by New Zealand law in relation to a financial service; or

      • (b) otherwise damaging the integrity or reputation of—

        • (i) New Zealand's financial markets; or

        • (ii) New Zealand's law or regulatory arrangements for regulating those markets.

    15A Registrar may refer application to FMA
    • (1) On receipt of an application under section 15, the Registrar may, if the Registrar considers it necessary or desirable after having regard to section 15AA, refer the application to the FMA and the FMA may, but is not required to, consider the application.

      (2) If the FMA decides to consider the application,—

      • (a) it must take account of the purposes of this Act and, of this Part (see sections 2Aand 9); and

      • (b) it may take account of any other matters the FMA considers to be relevant, including—

        • (i) whether the applicant provides, or intends to provide, financial services to any person in New Zealand; and

        • (ii) whether the applicant provides, or intends to provide, financial services to any person from a place of business in New Zealand.

      (2) If the FMA decides to consider the application, the FMA must, after taking into account section 15AA, consider whether preventing the applicant from being registered under section 16(1) is necessary or desirable.

      (3) If, in the FMA's view, the applicant should not be be prevented from being registered under section 16(1), the FMA must—

      • (a) comply with subsection (4); and

      • (b) if, having considered any submission received under subsection (4), the FMA remains of the view that the applicant should not be be prevented from being registered, direct the Registrar to reject the application in accordance with section 16(2); and

      • (c) give its reasons for that direction.

      (4) Before giving a direction under subsection (3)(b), the FMA must—

      • (a) give the applicant—

        • (i) written notice of its intention to give the direction; and

        • (ii) the reasons why it intends to give that direction; and

        • (iii) a date (being not less than 10 working days after the date of the notice referred to in subparagraph (i)) by which the applicant may make written submissions to the FMA in relation to its proposed direction; and

      • (b) consider any submissions received in accordance with paragraph (a)(iii).

      (5) The Registrar must comply with a direction given under subsection (3)(b).

      (6) A provider who is not satisfied with a direction given under this section may appeal to the High Court under section 42(1)(a).

    15B FMA may prevent registration regardless of whether applicant is otherwise qualified to be registered
    • The FMA may give a direction under section 15A in relation to an applicant regardless of whether the applicant is qualified for registration under section 13.

81 Section 16 amended (Registration of financial service provider)
  • (1) Repeal section 16(1)(a)(ii).

    (2) After section 16(1)(a)(iv), insert:

    • (aa) notify the provider of the Registrar's decision; and

    • (ab) require the provider to notify the Registrar, within 5 working days of from receiving notification under paragraph (aa), of the name and business address of, and of the provider's membership number in, the approved dispute resolution scheme of which the provider is a member (if the provider is required, by section 48, to be a member of a scheme); and.

    (3) In section 16(2),—

    • (a) after financial service provider, insert or if directed by the FMA to reject the application,:

    • (b) after decision, insert or the FMA's direction, as the case may be.

    (4) After section 16(2), insert:

    • (3) Subsection (1) does not apply if the FMA has directed the Registrar to reject the application.

82 Section 17 amended (Duty to notify changes relating to financial service provider)
  • (1) Replace section 17(1)(a)(iii) with:

    • (iii) the provider knows that any details on the register are no longer accurate, including information relating to the provider's membership of an approved dispute resolution scheme of which the provider is currently a member:.

    (2) Replace section 17(1)(c) with:

    • (c) the person responsible for an approved dispute resolution scheme of which a financial service provider was a member, if the person knows that the provider is no longer a member of that scheme, in which case the person responsible must also notify the Registrar of the following matters:

      • (i) whether that provider’s membership was terminated under section 63(ba); and

      • (ii) whether any remedial action imposed on that provider by the scheme has not been carried out; and

      • (iii) whether there is any unresolved complaint about that provider.

    (3) After section 17(1), insert:

    • (1A) To avoid doubt, the notification obligations in subsection (1)(a)(iii) and (c) apply in relation to an approved dispute resolution scheme or a reserve scheme that has been discontinued (whether as a result of approval being withdrawn or for any other reason).

    (4) In section 17(2), after change, insert or, in the case of an approved dispute resolution scheme or a reserve scheme that has been discontinued, within 10 days of that discontinuance.

83 Section 18 amended (Deregistration of financial service provider)
  • (1) After section 18(1)(a), insert:

    • (aa) has failed to notify the Registrar of the name, business address, and membership number, as required by section 16(1)(ab); or.

    (2) After section 18(1), insert:

    • (1A) The Registrar may, if the Registrar considers it necessary or desirable after taking into account section 18AA, refer the consideration of whether a financial service provider should be deregistered to the FMA for the FMA's direction, in which case section 18A applies.

    • (1B) The Registrar must deregister a financial service provider if the FMA gives a direction under section 18A(3)(c)(i).

84 New section 18A inserted (Consideration of deregistration of financial service provider by FMA) New sections 18AA to 18B inserted
  • After section 18, insert:

    18AA Purpose of FMA's powers relating to deregistration
    • The purpose of section 18A is to provide for the deregistration of a person (A) if A's registration has, will have, or is likely to have the effect of—

      • (a) creating, or causing the creation of, a false or misleading appearance with respect to the extent to which A—

        • (i) provides, or will provide, financial services in New Zealand; or

        • (ii) provides, or will provide, financial services from a place of business in New Zealand; or

        • (iii) is, or will be, regulated by New Zealand law in relation to a financial service; or

      • (b) otherwise damaging the integrity or reputation of—

        • (i) New Zealand's financial markets; or

        • (ii) New Zealand's law or regulatory arrangements for regulating those markets.

    18A Consideration of deregistration of financial service provider by FMA
    • (1) If the Registrar refers a matter to the FMA under section 18(1A), the FMA may, but is not required to, consider the referral.

      (1) The FMA—

      • (a) may, but is not required to, consider a referral under section 18(1A); and

      • (b) may otherwise consider giving a direction under this section at its own discretion (if a referral has not been made).

      (2) If the FMA decides to consider the referral,—

      • (a) it must take account of—

        • (i) the matters referred to in section 18(1); and

        • (ii) the purposes of this Act and of this Part (see sections 2A and 9); and

      • (b) it may take account of any other matters the FMA considers to be relevant.

      (2) If the FMA decides to consider the referral or otherwise decides to consider giving a direction under this section, the FMA must, after taking into account section 18AA, consider whether it is necessary or desirable for a financial service provider to be deregistered.

      (3) If, having considered the referral after acting under subsection (2), the FMA decides to issue give a direction to the Registrar under this section to deregister the financial service provider, the FMA must—

      • (a) give the financial service provider—

        • (i) written notice of its intention to give the direction; and

        • (ii) the reasons why it intends to give the direction; and

        • (iii) a date (being not less than 20 working days after the date of the notice referred to in subparagraph (i)) by which the applicant may make written submissions to the FMA in relation to its proposed direction; and

      • (b) consider any submissions received in accordance with paragraph (a)(iii); and

      • (c) either,

        • (i) if the FMA remains of the view that the financial service provider should be deregistered, direct the Registrar to deregister the provider in accordance with section 18; or

        • (ii) if the FMA decides that the provider should not be deregistered, advise the Registrar accordingly; and

      • (d) give its reasons for the direction or advice, as the case may be.

      (4) The Registrar must comply with a direction given under subsection (3)(c)(i).

      (5) A provider who is not satisfied with a direction given under this section may appeal to the High Court under section 42(1)(a).

      (6) Despite section 18(3), sections Sections 19 and 20 do not apply if a financial service provider is deregistered as a result of a direction given under subsection (3)(c)(i).

    18B FMA may direct deregistration regardless of whether section 18(1) applies
    • The FMA may give a direction under section 18A in relation to a person regardless of whether any of paragraphs (a) to (d) of section 18(1) apply.

84A Section 23 and cross-heading repealed
  • Section 23 and the cross-heading above that section are repealed.

85 Section 26 amended (Purposes of register)
  • In section 26(a)(ii)(B), delete or the reserve scheme.

86 Section 27 amended (Contents of register)
  • (1) In section 27(b), delete or the reserve scheme.

    (2) In section 27, insert as subsections (2) to (4) and (3):

    • (2) In addition to the information referred to in subsection (1), the Registrar may, if the Registrar thinks it is appropriate, insert a note of warning in the register in relation to a registered person if—

      • (a) a request for information has been made by the Registrar under this Act in relation to that person; or

      • (b) if the Registrar or the FMA is considering any matters relating to the deregistration of that person under this Act.

    • (3) The Registrar must remove a note of warning inserted under subsection (2) if the Registrar is satisfied that the reasons for inserting it no longer apply.

    • (4) Civil proceedings may not be brought against the Registrar in respect of things done in good faith in the performance or intended performance of the Registrar's functions under subsection (2) or (3).

87 Section 34 amended (Sharing information with other persons or bodies)
  • Repeal Replace section 34(4)(d) with:

    • (d) the Commerce Commission:.

88 Section 37 amended (Registrar’s inspection powers)
  • (1) After section 37(1)(c), insert:

    • (ca) is ordinarily resident in New Zealand; or

    • (cb) has a place of business in New Zealand; or

    • (cc) is in the business of providing a financial service; or.

    (2) After section 37(2)(a), insert:

    • (aa) ascertaining whether information provided to the Registrar is correct:

    • (ab) requiring a person, in relation to information provided to the Registrar, to—

      • (i) confirm that the information is correct; or

      • (ii) correct the information:

    • (ac) specifying—

      • (i) a particular form in which the confirmation or correction referred to in paragraph (ab) must be provided; and

      • (ii) a date by which the confirmation or correction must be provided; and

      • (iii) whether the confirmation or correction must be verified by the production of original documents or certified copies of original documents or by a statutory declaration:.

    (3) In section 37(6), after subsection (2)(a), insert to (ab) (including compliance with the specifications in subsection (2)(ac)).

89 Section 42 amended (Appeals from Registrar’s decisions)
  • (1) In the heading to section 42, after decisions, insert and FMA directions.

    (2) In section 42(1), after decisions of the Registrar, insert , or directions by the FMA to the Registrar in relation to the decisions referred to in paragraphs (a) and (b),.

    (2) After section 42(1), insert:

    • (1A) A financial service provider who is not satisfied with any direction given by the FMA under section 15A or 18A may appeal to the High Court.

    (3) In section 42(2) and (3)(a), after decision, insert or direction.

    (4) In section 42(3)(b), after Registrar, insert or the FMA.

    (5) Replace section 42(3)(c) with:

    • (c) refer the decision or direction back to the Registrar or the FMA (as the case may be) with directions to reconsider the whole or a specified part of the decision or direction.

89A Section 43 amended (Decisions continue in effect until appeal)
  • (1) In the heading to section 43, after Decisions, insert or directions.

    (2) In section 43, after decision, insert or direction.

90 Section 48 amended (Financial service provider must be member of dispute resolution scheme)
  • (1) In section 48(1), replace either an approved dispute resolution scheme, or the reserve scheme, with an approved dispute resolution scheme.

    (2) In section 48(2), delete or the reserve scheme.

91 Section 49F amended (Members of dispute resolution scheme must comply with rules and binding resolutions)
  • In section 49F(1), delete or the reserve scheme.

92 Section 49G amended (Offence to fail to comply with District Court order)
  • In section 49G(1), delete or the reserve scheme.

93 Section 50 amended (Meaning of approved dispute resolution scheme)
  • In section 50, insert as subsections (2) and (3):

    • (2) If an interim dispute resolution scheme is appointed under section 79AA, references in this Act to an approved dispute resolution scheme are, in relation to the interim dispute resolution scheme, to be read as including references to the interim dispute resolution scheme.

    • (3) However, nothing in sections 51 to 61 applies in relation to the interim dispute resolution scheme.

94 Section 52 amended (Mandatory considerations for approval)
  • After section 52(1)(d), insert:

    • (da) whether the scheme will accept all types of financial service providers as members and, if not, whether there are other approved schemes that cover all types of financial service providers:.

95 Section 56 amended (Withdrawal of approval)
  • After section 56(3), insert:

    • (3A) However, despite subsection (3), the Minister is not required to withdraw approval unless the person responsible for the scheme has, at the time of the request,—

      • (a) given the Minister—

        • (i) 3 months' notice of the date on which the proposed withdrawal of approval is to take place; or

        • (ii) any lesser notice period agreed to by the Minister; and

      • (b) informed the Minister of the arrangements that it has made to transfer, or to facilitate the transfer of, members of the existing scheme to another approved dispute resolution scheme or schemes.

96 Section 57 amended (Notice of intention to withdraw approval)
  • (1) After section 57(2)(b), insert:

    • (ba) the proposed method for transferring members of the scheme to another approved dispute resolution scheme or schemes; and.

    (2) After section 57(3), insert:

    • (4) The Minister's notice may also require the person responsible for the scheme to—

      • (a) notify members of the scheme of the proposed method for transferring those members to another approved dispute resolution scheme or schemes; and

      • (b) make clear to those members that, instead of being transferred to another scheme in accordance with the proposed method of transfer, the members may apply to join any other approved dispute resolution scheme; and

      • (c) remind each of its members of the member's obligation—

        • (i) to continue to be a member of an approved dispute resolution scheme, as required by section 48; and

        • (ii) to notify the Registrar that the member has transferred to another approved dispute resolution scheme, and details of that scheme, as required by section 17.

97 Section 61 replaced (Effect of withdrawal of approval on members of dispute resolution scheme)
  • Replace section 61 with:

    61 Effect of withdrawal of approval on members of dispute resolution scheme
    • When a dispute resolution scheme's approval is withdrawn, members each member of the scheme—

      • (a) cease to be members ceases to be a member of that scheme; and

      • (b) must ensure that,

        • (i) the members' member's obligations under section 17 are complied with; and

        • (ii) the members continue member continues to comply with section 48.

98 Section 63 amended (Rules about approved dispute resolution scheme)
  • (1) In section 63(a), delete (all providers of that type must be eligible).

    (2) After section 63(a), insert:

    • (aa) that the types of financial service providers referred to in paragraph (a) must be accepted as members of the scheme, unless—

      • (i) refused membership for a reason set out in paragraph (ba); or

      • (ii) a provider is not eligible for registration under this Act:.

    (3) After section 63(b), insert:

    • (ba) that membership may be refused or terminated because of an applicant's, or a member's,—

      • (i) material or persistent breach of a scheme's rules:

      • (ii) failure to take remedial action imposed on that provider by a scheme (whether or not that scheme still exists):

      • (iii) failure to pay a scheme's membership fee:

      • (iv) failure to continue to be a type of financial service provider that may be a member of the scheme:.

    (4) Replace section 63(g) with:

    • (g) the types of complaints that the scheme is able to deal with (which must include complaints relating to repossessions under Part 3A of the Credit Contracts and Consumer Finance Act 2003):

    • (g)  that the scheme has jurisdiction in respect of—

      • (i) a breach of contract, a statutory obligation, or an industry code; and

      • (ii) any other prescribed matters; and

      • (iii) any other matter provided for in the rules:.

    (5) In section 63(i), after compensate, insert including, in the case of a complaint relating to a repossession under Part 3A of the Credit Contracts and Consumer Finance Act 2003, compensation for non-financial loss, stress, humiliation, and inconvenience,.

    (6) Repeal section 63(k).

    (7) After section 63(r), insert:

    • (s) any other prescribed matters.

    (8) In section 63, insert as subsections (2) to (4):

    • (2) The compensation referred to in subsection (1)(i) that the scheme can impose on a member must be able to include, in the case of a complaint relating to a repossession under Part 3A of the Credit Contracts and Consumer Finance Act 2003, compensation for non-financial loss, stress, humiliation, and inconvenience up to a certain amount stated in the rules.

    • (3) The rules about an approved dispute resolution scheme must be treated as containing any provision that is implied into those rules by regulations made under this Act.

    • (4) A rule about an approved dispute resolution scheme has no effect to the extent that it is inconsistent with any provision implied into the rules by those regulations.

99 Section 66 amended (Minister's consideration of change of rules)
  • (1) In section 66(1), replace the Minister may with the Minister must.

    (2) Replace section 66(3) with:

    • (3) The Minister must comply with subsection (1) within 45 working days of the notification of the change of rules unless the Minister, within those 45 working days,—

      • (a) requests further information from the person responsible for the scheme (in which case, the Minister must comply with subsection (1) within 45 working days after receipt of that further information); or

      • (b) advises the person responsible for the scheme that a period of more than 45 working days is required to consider the change (in which case, the Minister must specify the time within which he or she will comply with subsection (1)).

100 Section 67 amended (Duty to co-operate and communicate information in certain circumstances)
  • (1) In section 67(a), delete and with the reserve scheme.

    (2) After section 67(c), insert:

    • (ca) if there is a series of material complaints about a particular creditor under a consumer credit contract or class of such creditors, communicate that fact to the Commerce Commission:.

    (3) In section 67(d), replace Financial Markets Authority with FMA.

    (4) In section 67, insert as subsection (2):

    • (2) In subsection (1)(ca), consumer credit contract

      • (a) has the same meaning as in section 11 of the Credit Contracts and Consumer Finance Act 2003; and

      • (b) includes a credit contract to which Part 3A of that Act applies.

101 Subpart 3 of Part 3 repealed
  • Repeal subpart 3 of Part 3.

102 Cross-heading above section 78 amended
  • In the cross-heading above section 78, delete and reserve scheme.

103 Section 78 amended (Publication of details relating to approved dispute resolution schemes and reserve scheme)
  • (1) In the heading to section 78, delete and reserve scheme.

    (2) Replace section 78(1)(a) with:

    • (a) must ensure that the names of approved dispute resolution schemes and the name and business address of the person responsible for each scheme are available for inspection by the public, free of charge, at the head office of the Ministry (during ordinary office hours), and on an Internet site that is publicly available (at all reasonable times):.

    (3) Repeal section 78(2).

104 Section 78A amended (Levy)
  • (1) Replace section 78A(2) with:

    • (2) The purpose of the levy is to meet, in whole or in part, the costs of the Ministry's functions under this Part (including the costs of collecting the levy).

    (2) Repeal section 78A(4)(a).

104 Section 78A and cross-heading repealed
  • Repeal section 78A and the cross-heading above that section.

105 Section 79 amended (Regulations under this Part)
  • (1) In section 79(1)(a), replace either an approved dispute resolution scheme or the reserve scheme, with an approved dispute resolution scheme.

    (2) After section 79(1)(a), insert:

    • (aa) providing rules for an interim dispute resolution scheme:.

    (2A) After section 79(1)(c), insert:

    • (ca) prescribing matters for the purposes of section 63(1)(g)(ii) and (s):

    • (cb) prescribing provisions to be implied into rules about approved dispute resolution schemes:.

    (3) After section 79(1A), insert:

    • (1B) The Minister must not recommend the making of regulations under subsection (1)(aa) unless the Minister—

      • (a) is satisfied that—

        • (i) members of an approved dispute resolution a scheme that has ceased, or will cease, to be an approved dispute resolution scheme would be, or are, unable to reasonably become members of another approved dispute resolution scheme; and

        • (ii) the interim dispute resolution scheme will be consistent with the purpose of this Part 3 (see section 47); and

        • (iii) the interim dispute resolution scheme will be capable of providing the a scheme for the purpose of this Part 3; and

        • (iv) the rules of the interim dispute resolution scheme will comply with section 63; and

      • (b) has consulted the FMA and any other persons that the Minister considers are likely to be substantially affected by the establishment of an interim dispute resolution scheme.

    • (1BA) The Minister must not recommend the making of regulations under subsection (1)(ca) or (cb) unless the Minister has consulted the FMA and any other persons that the Minister considers are likely to be substantially affected by the regulations.

    • (1C) However, a failure to consult with the persons referred to in subsection (1B)(b) or (1BA) does not affect the validity of the regulations.

106 New section 79AA inserted (Appointment of interim dispute resolution scheme)
  • After section 79, insert:

    79AA Appointment of interim dispute resolution scheme
    • (1) The Governor-General may, by Order in Council made on the recommendation of the Minister,—

      • (a) appoint a dispute resolution scheme to fulfil the functions of the interim dispute resolution scheme (with or without conditions) for a term recommended by the Minister:

      • (b) revoke an appointment made under paragraph (a).

      (2) The Minister may recommend an Order in Council for the purpose described in subsection (1)(a) only after complying with section 79(1B).

      (3) The Minister may recommend an Order in Council for the purpose described in subsection (1)(b) if the Minister is satisfied that the scheme is no longer required.

107 Section 79A amended (Pecuniary order for contravening wholesale certification requirement)
  • (1) In section 79A(1), replace Financial Markets Authority with FMA.

    (2) In section 79A(3)(b), delete or the reserve scheme.

107A Section 79B amended (Compensation for contravention of wholesale certification requirement)
  • In section 79B(2), replace Financial Markets Authority with FMA.

Subpart 2Consequential amendments to other Acts

108 Consequential amendments to other Acts
  • Amend the Acts specified in Schedule 4 as set out in that schedule.


Schedule 1
New Schedule 1AA inserted

s 67

Schedule 1AA
Application, savings, and transitional provisions relating to amendments made to this Act after 1 January 2013 2014

ss 5A 8B, 141A

1 Interpretation
  • In this schedule,—

    2013 Act means the Credit Contracts and Consumer Finance Amendment Act 2013

    principal Act means the Credit Contracts and Consumer Finance Act 2003.

Credit Contracts and Consumer Finance Amendment Act 2013

1A Minister may prepare Responsible Lending Code before commencement of Part 1A
  • (1) The Minister may exercise or perform a power or duty under sections 9E to 9G (as inserted by the 2013 Act) before section 9 of the 2013 Act comes into force.

    (2) Any consultation undertaken before section 9 of the 2013 Act comes into force that is of the kind referred to in section 9E(2)(b) or (e) must be treated as the consultation required for the purposes of that section (even if the consultation occurs before the enactment of the 2013 Act).

    (3) The Minister must ensure that the Responsible Lending Code first comes into force no later than 12 months after the date on which the 2013 Act receives the Royal assent.

2 Application of amendments to existing agreements
  • (1) Except as provided for in subclause (2),—

    • (a) the amendments to the principal Act in Part 1 of the 2013 Act do not apply to existing agreements; and

    • (b) the principal Act and the Credit (Repossession) Act 1997, as they were in force immediately before the commencement of the 2013 Act this clause, continue to apply for the purposes of those agreements.

    (2) The amendments referred to in subclause (1) apply in relation to existing agreements as follows:

    • (a) the amendments relating to made by sections 17 and 40 of the 2013 Act (request disclosure) apply only in relation to requests made on or after the commencement of the 2013 Act those sections:

    • (b) the amendments relating to disclosure of contract variations made by sections 15, 16, 35, and 39 of the 2013 Act (variation disclosure) apply only to variations made that take effect on or after the commencement of the 2013 Act those sections:

    • (ba) the amendments made by section 13A of the 2013 Act (continuing disclosure statements) apply only to continuing disclosure statements that are, or required to be, given or sent on or after the commencement of that section:

    • (bb) the amendments made by section 19 of the 2013 Act (disclosure of transfers) apply only to transfers that take effect on or after the commencement of that section:

    • (c) the amendments relating to made by sections 31 to 34A of the 2013 Act (hardship applications) apply only to applications made on or after the commencement of the 2013 Act those sections:

    • (d) Part 3A of the principal Act (as inserted by section 43 of the 2013 Act) applies only in relation to repossessions commenced on or after the commencement of the 2013 Act:

    • (e) the lender responsibility principles (see section 9B(2) of the principal Act, as inserted by section 9 of the 2013 Act) apply only to a variation of a contract where the variation is made takes effect on or after the commencement of section 9 of the 2013 Act.

    • (f) the amendments made by sections 24 to 27 of the 2013 Act (fees) apply only to fees incurred on or after the commencement of the 2013 Act.

    (3) For the purposes of subclause (2)(d), a repossession is commenced when a repossession warning notice is served (see section 83D of the principal Act, as inserted by section 43 of the 2013 Act).

    (4) In this clause, existing agreement means any credit contract, security agreement, lease, buy-back transaction, or other contract or arrangement—

    • (a) to which the principal Act or the Credit (Repossession) Act 1997 (as it was in force before the 2013 Act this clause came into force) applies; and

    • (b) that was entered into before the 2013 Act this clause came into force.


Schedule 2
New Schedules 3A and Schedule 3B inserted

s 69

Schedule 3A
Key information concerning repossession warning notice

s 83D(3)(b)

The following information is the key information concerning a consumer credit contract as is applicable:

  • (a) the full name and address of the debtor and address from which goods will be repossessed:

  • (b) the full name and contact details of the creditor:

  • (ba) the date of the credit contract:

  • (c) the nature and amount of default under a specified the credit contract:

  • (d) a statement informing the debtor that the debtor can reinstate or settle the agreement:

  • (e) information about reinstatement of the agreement, including—

    • (i) the amount of arrears of instalments, including interest and other charges; and

    • (ii) the actions that the debtor must take to remedy breaches of agreement:

  • (f) information about settlement of the agreement, including—

    • (i) the balance of the advance outstanding, together with interest and charges payable under the agreement; and

    • (ii) the obligations that the debtor must perform:

  • (g) information about how, where, and by when the debtor must make payments, and how the debtor may contact the creditor:

  • (d) if the default is capable of being remedied, a statement—

    • (i) that the debtor must, within a time specified in the statement (being at least 15 days after the notice is given to the debtor), remedy the default; and

    • (ii) about how the default must be remedied; and

    • (iii) that if the debtor does not comply with requirements relating to remedying the default, the creditor intends to repossess the goods specified in the notice:

  • (e) if the default is not capable of being remedied, a statement that the creditor intends to repossess the goods specified in the notice on or after a specified date (being a date not less than 15 days after the notice is given to the debtor):

  • (h) a statement setting out that if the agreement is not reinstated or settled, the goods specified in the notice will be repossessed:

  • (i) sufficient information to enable the identification of the goods to be repossessed:

  • (j) a statement informing the debtor that the debtor has the right to voluntarily return the goods specified in the warning notice, and that the process and rules after the return of those goods will be in accordance with the process and rules that apply after a repossession:

  • (j) a statement—

    • (i) informing the debtor that the debtor has the right to voluntarily deliver the goods specified in the repossession warning notice to the creditor, and that the process and rules after the delivery of those goods will be in accordance with the process and rules that apply after a repossession; and

    • (ii) specifying a reasonable place to which the debtor may voluntarily deliver the goods for the purposes of exercising that right:

  • (k) a checklist of the conditions that must be met before a creditor has the right to repossess goods, or has the authority to enter premises to repossess those goods, including,—

    • (i) in relation to a right to repossess goods,—

      • (A) that there is a credit contract that provides that the creditor has a security interest in the goods to be repossessed; and

      • (B) that credit contract—

        • specifically identifies those goods; and

        • gives the creditor the right to enter the debtor’s premises and to repossess those goods; and

      • (C) that the debtor is in default; and

      • (D) that a repossession warning notice must have been given to the debtor at least 15 days prior to before the repossession occurs, and confirmation that such a notice has been given:

    • (ii) in relation to an authority to enter premises to repossess goods,—

      • (A) that the person carrying out the repossession is certified licensed or holds a certificate of approval and, if a creditor’s agent is undertaking the repossession, that that person has the authority to repossess the goods on behalf of the creditor; and

      • (B) if the person carrying out the repossession is entering premises outside the hours between 6 am and 9 pm or on a Sunday or a public holiday, the creditor has the prior written consent of the debtor to do so:

  • (ka) the expiry date of the notice (see section 83D(4)) and a statement that the notice is of no effect after that date:

  • (l) details about the debtor's right to seek relief in circumstances of unforeseen hardship:

  • (m) details about what the debtor needs to do if he or she disputes some aspect of the proposed repossession, including—

    • (i) details about the dispute resolution process; and

    • (ii) that, if a written complaint has been made, repossession may not proceed until that complaint has been resolved; and

    • (iii) the contact details of the dispute resolution scheme of which the creditor is a member:

  • (n) where a repossession warning notice is sent to a guarantor, advice to the guarantor that—

    • (i) the notice is being sent to the guarantor in his or her capacity as guarantor of the named debtor; and

    • (ii) the guarantor has rights in relation to the proposed repossession, details of those rights, and what the guarantor may do to protect his or her position.

Schedule 3B
Key information concerning post-repossession notice

s 83P(2)(b)

The following information is the key information concerning a consumer credit contract as is applicable:

  • (a) the full name and address of the debtor:

  • (b) the full name and contact details of the creditor:

  • (ba) the date of the credit contract:

  • (c) the date of the repossession:

  • (d) a list of the goods repossessed:

  • (e) the creditor's estimate of the value of the goods repossessed:

  • (f) a statement informing the debtor that the debtor may reinstate or settle the agreement contract, and what the debtor must do to reinstate or settle the agreement contract, including,

    • (i) in relation to the reinstatement of the agreement contract,—

      • (A) the creditor’s estimate of the total amount required to be paid to reinstate the agreement contract; and

      • (B) details of how this that total is reached, including the amount of arrears in payments of the instalments due (including interest and other charges charges, credit fees, and default fees), and a breakdown of the costs of the actions that the debtor must take to remedy the breach of the agreement referred to in section 83V(2):

    • (ii) in relation to the settlement of the agreement contract,—

      • (A) the creditor’s estimate of the total amount required to be paid to settle that agreement contract and the amounts that may comprise this that total:; and

      • (B) details of how this that total amount is reached, including the balance of the advance outstanding (together with interest and charges charges, credit fees, and default fees payable under the agreement contract), and a breakdown of the costs of— referred to in section 83Y(2); and

        • repossession:

        • holding, storage, repairs, or maintenance of the goods:

        • valuing and preparing the goods for sale:

        • redelivery of the goods:

        • remedying breaches of the agreement; and

      • (C) the obligations that the debtor must fulfil to settle the agreement contract:

  • (g) a statement setting out that, if the agreement contract is not reinstated or settled,—

    • (i) the repossessed goods will be sold; and

    • (ii) in that case, the debtor will be—

      • (A) liable for the difference between the debtor’s liability and the net proceeds of the sale of the goods; or

      • (B) if the net proceeds of the sale of the goods are more than enough to cover the liability, entitled to a refund:

  • (ga) a statement that the repossessed goods may not be sold until after the expiry of 15 days from the date of service of the notice on the debtor (unless the debtor consents to an earlier sale or requires the creditor to offer the goods for sale within the 15 days):

  • (h) details about the debtor's right to seek relief in circumstances of unforeseen hardship; and:

  • (i) details about what the debtor needs to do if he or she disputes some aspect of the proposed repossession, including—

    • (i) details about the dispute resolution process; and

    • (ii) that, if a complaint has been made, repossession may not proceed until that complaint has been resolved; and

    • (iii) the contact details of the dispute resolution scheme of which the creditor is a member:

  • (i) a statement that—

    • (i) the debtor is entitled, at any time after the creditor repossesses the goods but before the creditor sells or agrees to sell the goods, to obtain a valuation of the goods at the debtor's expense; and

    • (ii) the creditor must give the debtor or the debtor's valuer access to the goods to enable the valuation to be completed:

  • (ia) a statement that—

    • (i) the debtor has a right at any time before the creditor sells or agrees to sell the consumer goods, to require the creditor to sell the goods to a person introduced by the debtor, being a person who is prepared to purchase the goods for cash at a price not less than the estimated value of the goods specified under paragraph (e); and

    • (ii) if the debtor exercises that right, the debtor must give to the creditor a written notice of the exercise of the right that is signed by the debtor or the debtor's agent:

  • (ib) a statement that—

    • (i) if the goods have not been sold within 30 working days after the date of the repossession, the debtor is entitled to require the creditor to put the goods up for sale by auction; and

    • (ii) if the debtor exercises that right, the debtor must require the sale by a written notice to the creditor that is signed by the debtor or the debtor’s agent:

  • (j) where a post-repossession notice is sent to a guarantor, advice to the guarantor that—

    • (i) the notice is being sent to the guarantor in his or her capacity as guarantor of the named debtor; and

    • (ii) the guarantor has rights in relation to the repossession, details of those rights, and what the guarantor may do to protect his or her position.


Schedule 3
Consequential amendments to, or repeals of, other Acts

s 70

Credit (Repossession) Act 1997 (1997 No 85)

Repeal.

Disputes Tribunals Act 1988 (1988 No 110)

In Schedule 1, Part 2, repeal the item relating to the Credit (Repossession) Act 1997.

Electronic Transactions Act 2002 (2002 No 35)

In the Schedule, Part 2, replace the item relating to the Credit (Repossession) Act 1997 with:

Credit Contracts and Consumer Finance Act 2003 (2003 No 52)

Section 83J.

Fair Trading Act 1986 (1986 No 121)

In section 36B(4), after that Act, insert if no interest charges, and no credit fees, are payable under the layby sale agreement.

After section 36B(4), insert:

  • (5) In subsection (4) and in this subsection,—

    associated person has the same meaning as in section 8A of the Credit Contracts and Consumer Finance Act 2003

    credit fees

    • (a) means fees or charges payable by a consumer under a layby sale agreement, or payable by a consumer to, or for the benefit of, the supplier in connection with a layby sale agreement; and

    • (b) includes—

      • (i) a fee or charge payable on a breach of a layby sale agreement by a consumer or on the enforcement of a layby sale agreement by a supplier:

      • (ii) a fee or charge payable by a consumer for an amount payable, or to reimburse an amount paid, by the supplier to an associated person of the supplier; but

    • (c) does not include—

      • (i) a cancellation charge referred to in section 36F:

      • (ii) charges for an optional service:

      • (iii) government charges, duties, taxes, or levies:

      • (iv) a fee or charge payable by a consumer for an amount payable, or to reimburse an amount paid, by the supplier to another person who is not an associated person of the supplier

    interest charge means a charge that accrues over time and is determined by applying a rate to the whole or any part of the outstanding amount that the consumer is required to pay to the supplier under the layby sale agreement (and includes any additional interest charge payable on a breach of a layby sale agreement by a consumer).

Income Tax Act 2007 (2007 No 97)

In section FA 15(4)(a), replace section 31(2)(c) and (d) of the Credit (Repossession) Act 1997 with section 83Y(2) of the Credit Contracts and Consumer Finance Act 2003.

Insolvency Act 2006 (2006 No 55)

In section 129, replace cash price, consumer goods, creditor, debtor, and post-possession notice have the same meanings as in section 2(1) of the Credit (Repossession) Act 1997 with cash price, consumer goods, creditor, debtor, and post-repossession notice have the same meanings as in section 5 of the Credit Contracts and Consumer Finance Act 2003.

In section 131(1)(a), replace section 30 of the Credit (Repossession) Act 1997 with section 83X of the Credit Contracts and Consumer Finance Act 2003.

In section 131(1)(b), replace section 25 of the Credit (Repossession) Act 1997 with section 83S of the Credit Contracts and Consumer Finance Act 2003.

In section 131(1)(b), replace section 31 with section 83Y.

In section 131(2), replace the Credit (Repossession) Act 1997 with Part 3A of the Credit Contracts and Consumer Finance Act 2003.

In section 132(2), replace section 35 of the Credit (Repossession) Act 1997 with section 83ZG of the Credit Contracts and Consumer Finance Act 2003.

In section 132(3)(a)(i), replace post-possession with post-repossession.

In section 132(3)(a)(ii), replace section 33 of the Credit (Repossession) Act 1997 with section 83ZC of the Credit Contracts and Consumer Finance Act 2003.

In section 132(3)(a)(ii)(b), replace sections 20 to 36 of the Credit (Repossession) Act 1997 with subpart 5 of Part 3A of the Credit Contracts and Consumer Finance Act 2003.

Personal Property Securities Act 1999 (1999 No 126)

In section 44, before the example, insert as subsection (2):

  • (2) However, in relation to an appropriation of after-acquired property that is consumer goods, such appropriation—

    • (a) must be made by the debtor, either personally or by the debtor's agent; and

    • (b) cannot be made by the creditor acting as the debtor's attorney or agent.

Replace section 105 with:

105 Application of this Part
  • (1) Except as provided for in subsection (2), this Part applies to all security interests.

    (2) This Part does not apply to the following security interests:

    • (a) security interests created or provided for by—

      • (i) a transfer of an account receivable or chattel paper; or

      • (ii) a lease for a term of more than 1 year that does not secure payment or performance of an obligation; or

      • (iii) a commercial consignment that does not secure payment or performance of an obligation:

    • (b) security interests in consumer goods to which Part 3A of the Credit Contracts and Consumer Finance Act 2003 applies, other than security interests in relation to accessions (see section 83F of that Act).

Private Security Personnel and Private Investigators Act 2010 (2010 No 115)

In section 4, insert in their appropriate alphabetical order:

consumer goods has the same meaning as in section 5 of the Credit Contracts and Consumer Finance Act 2003

creditor has the same meaning as in section 5 of the Credit Contracts and Consumer Finance Act 2003, and includes a creditor referred to in section 83AB(2)(b) of that Act

repossession agent has the meaning given to it in section 8A

repossession employee has the meaning given to it in section 16A.

New section 8A: insert after section 8:

8A Meaning of repossession agent
  • In this Act, repossession agent means a person who for valuable consideration, either by himself or herself or in partnership with any other person, carries on a business of repossessing consumer goods on behalf of a creditor.

New section 16A: insert after section 16:

16A Meaning of repossession employee
  • In this Act, repossession employee

    • (a) means an individual who in the course of his or her employment, or engagement as a contractor, by a repossession agent or a creditor repossesses, or holds himself or herself out as being authorised to repossess, consumer goods; and

    • (b) includes a creditor who carries out a repossession himself or herself, regardless of whether the creditor is, in fact, an employee.

In the heading to section 20, after definition of, insert repossession employee,.

In section 20(1), before 17, insert 16A, in each place.

After section 23(1)(d), insert:

  • (da) a repossession agent:.

After section 44(1)(d), insert:

  • (da) a repossession employee:.

After section 45(1), insert:

  • (1A) No person, not being the holder of a licence, may employ, engage as a contractor, or permit to act as a repossession employee any individual who does not hold a certificate of approval as a repossession employee.

In section 55, insert as subsection (2):

  • (2) Subject to this Act, to the Credit Contracts and Consumer Finance Act 2003, and to any conditions imposed by the Authority, a certificate of approval that is held by a creditor referred to in section 16A(b) authorises the creditor to carry out a repossession of consumer goods himself or herself.

After section 62(f)(iii), insert:

  • (iiia) offence under section 103(1) of the Credit Contracts and Consumer Finance Act 2003 that involves a breach of any provision of Part 3A of that Act; or.

After section 63(1)(a)(i), insert:

  • (ia) offence under section 103(1) of the Credit Contracts and Consumer Finance Act 2003 that involves a breach of any provision of Part 3A of that Act; or.

In section 69, after engages any, insert repossession employee or.

In section 70, after engages any, insert repossession employee or in each place.

In section 110(1)(a), replace a property guard, with a repossession agent, property guard,.

In section 110(1)(b), replace a property guard employee, with a repossession employee, property guard employee,.

In section 114(1)(k), after or engage, insert repossession employees or.

In the heading to section 126, replace personal guard or crowd controller with repossession agent, personal guard, or crowd controller.

In section 126, before subsection (1), insert:

  • (1A)  A person who is a repossession agent within the meaning of section 8A is not required to hold a licence under this Act in respect of that class of business until the specified date.

After section 126(2), insert:

  • (2A)  A person who performs the work of a repossession employee described in section 16A is not required to hold a certificate of approval under this Act in respect of that class of work until the specified date.

After section 126, insert:

126A Transition period for business or work of repossession agent
  • (1) A person who is a repossession agent within the meaning of section 8A is not required to hold a licence under this Act in respect of that class of business until the specified date.

    (2) A person who performs the work of a repossession employee described in section 16A is not required to hold a certificate of approval under this Act in respect of that class of work until the specified date.

    (3) In this section, specified date means the date that is specified for the purpose of this section by the Governor-General by Order in Council.

Property Law Act 2007 (2007 No 91)

In section 77, replace the Credit (Repossession) Act 1997 with Part 3A of the Credit Contracts and Consumer Finance Act 2003.

Summary Proceedings Act 1957 (1957 No 87)

In section 2(1), definition of infringement notice, insert after paragraph (h):

  • (ha) section 105C of the Credit Contracts and Consumer Finance Act 2003; or.


Schedule 4
Consequential amendments to other Acts

s 108

Financial Advisers Act 2008 (2008 No 91)

In section 5, definition of approved dispute resolution scheme, delete , but also includes the reserve scheme within the meaning of section 71 of the FSP Act.

Securities Trustees and Statutory Supervisors Act 2011 (2011 No 10)

In section 16(2)(c)(ii), delete and (b).


Legislative history

18 April 2013Introduction (Bill 104–1)
17 September 2013First reading and referral to Commerce Commitee